UPDATE 1-BHP sees weaker rebound from downturn than in past

* Recovery from downturn seen weaker than in past

* BHP to spend $10 bln on capex, exploration this FY (Adds details, background)

LONDON, Oct 29 - BHP Billiton, the world's biggest mining company, said a recovery from the global downturn was expected to be weaker than in previous recessions.

"It is our view that we will come out of this recession less strongly than in previous cycles," Chief Executive Marius Kloppers told the firm's annual general meeting of shareholders in London on Thursday.

"We, therefore, believe it won't be until mid 2010 before we see clean underlying demand that is not masked by inventory effects."

Restocking in major economies is underway, but commodity demand will depend on the strength of rebuilding inventories in industrialised countries, he added.

Asia would remain a bedrock of commodity demand, added Chairman Don Argus.

"While we believe the global economic recovery will be sluggish, we also continue to believe there will be strong long-term demand for our products from the Asian region."

Argus is due to retire in early 2010 after more than 10 years as chairman, presiding over the group's transformation into the world's biggest miner. He will be replaced by former Ford Motor Co chief Jac Nasser.

Kloppers also said that BHP planned to spend about $10 billion on capital and exploration spending during the current financial year to end June 2010. This is largely level with the previous year, when spending was $10.7 billion.

Due to its strong balance sheet, the company was well positioned "to take advantage of any opportunities the current market delivers", he added.

BHP has previously said it was interested in expanding in potash, a key raw material for fertiliser, and speculation has swirled about possible acquisitions in that sector. On Oct. 21, BHP declared force majeure at Olympic Dam, the world's No. 4 copper mine, and reported near-flat quarterly output of iron ore.

The firm said on Oct. 15 that it and Rio Tinto, the world's second- and third-biggest iron ore miners, have scrapped a plan to co-market some iron ore from a proposed Australia joint venture that has drawn criticism as being anti-competitive.