(Updates to midday, changes byline)
*Microsoft shares jump as Icahn seeks Yahoo control
*Data on industrial output, NY manufacturing weak
*CNET shares soar on CBS deal
By Cal Mankowski
NEW YORK, May 15 (Reuters) - U.S. stocks rose on Thursday
as the price of oil fell, overshadowing a barrage of weak
economic news.
Tech bellwether Microsoft Corp <MSFT.O> shares rose after
financier Carl Icahn started a proxy battle to get control of
Yahoo and force it to strike a deal with Microsoft.
After an initial rise above $126 per barrel, crude oil
futures did an abrupt about-face and sank to below $122.
Traders said a surprisingly large increase in U.S. natural gas
inventories contributed to crude's fall.
Earlier, investment bank UBS sharply raised its projection
for oil prices and said inflation risks from rising crude costs
would put a global economic recovery in 2009-2010 at risk. An
index of oil shares <.OIX> rose 1.1 percent.
Economic data painted a picture of a weak economy. A report
showed softer-than-expected U.S. industrial output for April
and a manufacturing report from the New York Federal Reserve
was also weak. Meanwhile, initial jobless claims rose slightly
more than expected in the latest week.
Yahoo shares were up 0.2 percent to $27.20 while Microsoft
rose 1.7 percent to $30.44.
"They must feel that Icahn is not going to win his proxy
contest, or, if he does win, that he is willing to accept a
price very close to what Microsoft is willing to pay," said Jim
Awad, chairman of W.P. Stewart Asset Management in New York.
When talks between Microsoft and Yahoo ended earlier this
month, the software company was offering $33 a share for a
Yahoo but the Internet company was holding out for $37.
The Dow Jones industrial average <> rose 45.02 points,
or 0.35 percent, to 12,943.40. The Standard & Poor's 500 Index
<.SPX> gained 6.60 points, or 0.47 percent, to 1,415.26. The
Nasdaq Composite Index <> climbed 23.31 points, or 0.93
percent, to 2,520.01.
Federal Reserve Chairman Ben Bernanke sounded a note of
caution when he called for some banks to raise more capital. He
told a conference on bank structure and competition in Chicago
that financial market turmoil underscores the need for
"generous" capital cushions.
In other deal news, CBS said it would but CNET, sending
that company's shares soaring 43.4 percent to $11.40.
General Electric Co <GE.N> is looking to sell its appliance
unit in an auction that could bring in $5 billion to $8
billion, The Wall Street Journal reported on Wednesday. GE
shares slipped 0.4 percent to $32.40.
Shares of store operator J.C. Penney Co Inc <JCP.N> rose
4.5 percent to $46.34 after the retailer posted a quarterly
profit that topped Wall Street's forecasts. For details, see
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(Additional reporting by Kristina Cooke; Editing by Kenneth
Barry)
