UPDATE 1-Palm shares rise as takeover rumors persist

* Shares up 11.6 percent; Palm declines to comment

* Takeover rumors persist; Taiwan’s HTC latest named

* HTC says does not comment on rumors (Adds details of published report, background; updates shares)

NEW YORK, April 9 (Reuters) - Palm Inc PALM.O shares jumped on Friday, capping a volatile week in which the smartphone maker's stock seesawed on takeover rumors and options market chatter.

Shares of Palm were up 11.6 percent in early afternoon trading on Nasdaq, following a report in Taiwan's Economic Daily News that HTC Corp 2498.TW that the world's No. 5 smartphone maker has "opened discussions about an intent to acquire" Palm.

A U.S. spokeswoman for HTC, Linda Mills, said the company does not comment on rumors, but added: “To the best of my knowledge this is just a rumor.”

A spokesman for Palm, which makes the Pre and Pixi phones and develops WebOS phone software, declined to comment.

HTC ranks behind bigger smartphone rivals Nokia Oyj NOK1V.HE, Blackberry maker Research in Motion RIM.TO, iPhone maker Apple Inc AAPL.O and Motorola Inc MOT.N in the global smartphone rankings, according to research firm IDC.

HTC's phones are based on software developed by Microsoft Corp MSFT.O and Google Inc's GOOG.O Android software. A Palm deal would give HTC its own operating system software as well as Palm's established U.S. brand.

Still, a deal would likely come with a price tag of more than $1 billion for a company with a small market share in the shadow of Apple’s iPhone and the Blackberry’s ubiquity among corporate and government users.

Palm’s stock soared earlier this week as investors covered short positions on renewed speculation that the smartphone maker might be an acquisition target. [ID:nN07121914]

The talk on Wednesday was focused on Lenovo Group Ltd 0992.HK as a potential bidder for Palm. [ID:nLDE63205T]

Palm has for years been mentioned as a target for larger companies hoping to enter the mobile market or expand their presence [ID:nN23396446].

Analysts have termed unlikely a Palm buyout by technology hardware makers like Dell Inc DELL.O, citing the cost of buying Palm and integrating its technology.

But recent concerns about Palm’s viability, and have stirred up more talk. In the past 6 months, its stock has tumbled nearly 70 percent, slashing it market capitalization to about $780 million from $2.4 billion. (Reporting by Franklin Paul and Sinead Carew; Editing by Gerald E. McCormick and Tim Dobbyn)