Microsoft shares are expected to rise sharply when the New York stock market resumes trading today after the judge in its anti-trust case tried a fresh tack to resolve the landmark trial by appointing a respected appeals court jurist to mediate in the case.

At the same time, US District Court Judge Thomas Penfield Jackson set a schedule for oral arguments to help him decide whether the company violated antitrust law, assuring the case will go forward as scheduled if no settlement is reached.

Microsoft, the Justice Department and the leaders of the 19 states involved in the case applauded Judge Jackson's decision to appoint Judge Richard Posner, head of the US Court of Appeals in Chicago, to mediate in the case, "acting in a private capacity."

After the close of regular trading on Friday night, Microsoft shares rose to $89.50 in heavy trading from their Nasdaq close of $86.

The order to appoint a mediator came two weeks to the day after Judge Jackson found that Microsoft used monopoly power to harm consumers, competitors and other companies. The next step is to determine if the findings of fact constitute a violation of antitrust law by Microsoft, the world's leading software maker.

Judge Jackson underscored his decision that the case will stay on track by ordering that none of his deadlines should be "deemed postponed" by his order for mediation. He set February 22nd to hear oral arguments if no settlement is reached.

Both sides expressed enthusiasm for Judge Jackson's decision and said they were open to trying to reach agreement. "We think this is essentially a very positive step toward a possible resolution of the case," said Microsoft spokesman Mark Murray. "We're looking forward to working with Judge Posner to try to reach a fair and reasonable solution."

Justice Department spokeswoman Gina Talamona said the government looked forward to finding "ways to address the serious competitive problems identified in the court's findings of fact." She added that the Justice Department "has always been willing to seek a settlement that would promote competition, innovation and consumer choice."

Judge Posner is one of the leading proponents of the conservative "Chicago School," which - among other things - altered the direction of antitrust law to rely less on government and more on the market.

His rulings are admired by lawyers of many political stripes as models of clarity and wit. American University Law Professor Jonathan Baker said Posner is "one of the most respected and authoritative scholars in the field of antitrust."

"If Judge Posner tells Microsoft that an adverse decision by Judge Jackson is likely to be sustained on appeal, Microsoft has to take that decision seriously," said Prof Baker, who teaches antitrust and at one time headed the Bureau of Economics for the Federal Trade Commission.

Legal scholars say it is dangerous to pigeonhole Posner. For example, Posner called the break-up of AT&T in 1984 "a landmark in the deregulation movement [that] set the stage for the enormous growth in telecommunications that is so salient a feature of today's economy."