US SMALL/MIDCAPS-Energy up with oil, industrials on M&A

By Rodrigo Campos

NEW YORK, Nov 3 (Reuters) - Mid- and small-cap stocks rallied on Tuesday as upbeat factory data lifted oil prices and energy shares, while industrials got a boost from Warren Buffett's multibillion dollar deal to buy Burlington Northern railroad.

Quicksilver Resources Inc (KWK.N) led the midcap energy sector higher with a 9.3 percent rise to $13.27. Small-cap Matrix Service Co (MTRX.O) added 8 percent to $9.48 after posting quarterly results.

Crude futures CLc1 settled up 1.9 percent at $79.60 per barrel on strong factory orders data and a rally in gold. The S&P Midcap energy sector .4GSPE gained 2.7 percent while the energy small caps .6GSPE rose 3 percent.

Warren Buffett's Berkshire Hathaway Inc (BRKa.N) agreed to buy Burlington Northern Santa Fe Corp (BNI.N) in an acquisition that values the railroad company at $34 billion, and is Berkshire's biggest deal ever. For details see [ID:nN03483590].

Smaller railroad Kansas City Southern (KSU.N) jumped 7.1 percent to $25.79 and the S&P Midcap Road & Rail Industry index .4GSPRAR gained 4.3 percent.

"Without question transports in general are following upon that bid (for BNSF)," said Scott Billeaudeau, portfolio manager at Fifth Third Asset Management in Minneapolis.

"With the economy improving, especially industrials, it is going to be good for the energy sector," he said. "Oil up is certainly feeding into that."

Data showed earlier U.S. factory orders rose 0.9 percent in September, more than forecast, and inventories continued to shrink, bolstering the prospects for a sustained economic recovery. [ID:nN03499628].

The S&P MidCap 400 index .MID gained 1.2 percent while the S&P SmallCap index .SML added 1.3 percent. In comparison, the large-cap S&P 500 index .SPX edged up 0.2 percent.

Shares of Oshkosh Corp (OSK.N) jumped 10.9 percent to $35.29 after the specialty truck maker reported stronger-than-expected earnings as sales of tactical vehicles to the Pentagon helped offset continuing weakness in construction equipment sales. [ID:nN29350434].

Car rental company Avis Budget Group Inc (CAR.N) rose 11.5 percent to $9.42 after it posted a quarterly profit. [ID:nBNG515959].

Texas Roadhouse Inc's (TXRH.O) shares soared 16.7 percent to $10.96 a day after the bar-and-grill restaurant chain's quarterly profit topped market estimates and it raised its 2009 earnings view. [ID:nBNG470546].

(Editing by Kenneth Barry)