UPDATE 7-Glencore and Xstrata in $80 bln takeover talks

* Xstrata says received approach from Glencore

* Xstrata says in talks over "all share merger of equals"

* Xstrata shares jump over 14 percent, Glencore up over 8 percent

* Shareholders say will demand premium (Adds details on premium, chief executive role, quotes, updates shares)

By Clara Ferreira-Marques and Victoria Howley

LONDON, Feb 2 (Reuters) - Commodities trader Glencore is in talks to buy mining group Xstrata in an all-share transaction that could create a combined group worth more than 50 billion pounds ($79 billion), shaking up the industry with its biggest deal to date.

Glencore, the world's largest diversified commodities trader, already owns 34 percent of Xstrata and a tie-up between the two -- a deal which would trump Rio Tinto's $38 billion acquisition of Alcan in 2007 -- has long been expected, as Glencore aims to add more mines to its trading clout.

"We've always had the belief these two companies should be together," Glencore Chief Executive Ivan Glasenberg told a financial conference in Moscow.

Investors and analysts say the main potential stumbling block, after years of on-off talks, will be the price -- the premium, if any, offered to Xstrata shareholders, who are already signalling they want to see the growth profile of their company recognised in any offer, however friendly, and will require a sweetener to approve the move.