US SMALL/MIDCAPS-M&A activity lifts stocks

NEW YORK July 19 (Reuters) - Mid- and small-cap stocks rose on Monday with help from mergers and acquisitions activity.

Shares in Quicksilver Resources (KWK.N), a Texan developer of unconventional gas, jumped nearly 17 percent on a media report that India's Reliance Industries (RELI.BO) is in talks about a possible buyout. For more on this, see [ID:nSGE66I03L]

ATC Technology Corp ATAC.O, which makes transmission systems, said it agreed to be acquired by privately held GENCO Distribution System for about $512.6 million in cash, sending the shares soaring nearly 40 percent. [ID:nSGE66I0F5]

Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois, highlighted the important role M&A plays in the mid-and small-cap sector and said activity is likely to continue. "It definitely gives that sector some life," he said.

Also in the M&A arena, shares in Cypress Bioscience Inc CYPB.O jumped 34 percent to $3.35 after hedge fund Ramius said it offered to buy the drugmaker for about $154 million, or about $4 per share. [ID:nSGE66I0H5].

The S&P MidCap 400 index .MID rose 0.6 percent while the S&P SmallCap 600 index .SML advanced 0.5 percent. In comparison, the benchmark S&P 500 .SPX gained 0.6 percent.

Small- and mid-cap companies, which outperformed their larger peers at the start of the year on hopes of a strong recovery, have started to lag as fears of an economic slowdown grow.

The small- and mid-cap sector is typically more responsive to swings in economic activity.

Since peaking this year in April the small-cap index has fallen 16.2 percent and mid-cap stocks are down 13.9 percent. That compares with a 12 percent drop in the S&P 500. However, large-cap stocks are still down more since the start of the year.

Shares of U.S. for-profit education companies rose on speculation the government may water down proposals to cut loans to programs that leave students with high debt levels compared with their starting salaries. [ID:nSGE66I0JF]

The S&P 1500 education services sub industry index .15GSPEDUS rose 4.2 percent. Top gainers included Corinthian Colleges Inc (COCO.O), up 9 percent to $10.40, Capella Education Co (CPLA.O), up 10.3 percent to $88.90, and Apollo Group (APOL.O), up 5.4 percent to $48.03.

On the earnings front, shares in Pet pharmacy PetMed Express Inc (PETS.O) fell 5.5 percent to $16.66 and hit a 52-week low as first-quarter profit missed Wall Street expectations and sales unexpectedly fell. (Reporting by Edward Krudy; Editing by Dan Grebler)