US stock markets posted solid gains on Thursday as the CBS television group sought to acquire CNET Networks, and as billionaire investor Carl Icahn launched an audacious bid to overhaul Yahoo's board.

Investors paid little heed to remarks by Federal Reserve Chairperson Ben Bernanke who warned that America's financial markets remained in a fragile state.

The Dow Jones Industrial Average closed up 94.28 points (0.73 percent) at 12&bsp;992.66.

The Nasdaq composite, a barometer for the technology sector, gained 37.03 points (1.48 percent) to 2533.73 while the Standard & Poor's 500 broad-market index finished up 14.91 points (1.06 percent) at 1423.57.

"Today was like a flashback to the M&A (merger and acquisition) heyday of spring 2007 on Wall Street," said Elizabeth Harrow at Schaeffer's Research, noting that the prospect of big tech deals helped lift the market.

"And, with crude-oil futures pulling back to settle at a one-week low, there was nothing to stop the bulls from taking the reins in today's session."

CBS said its planned $1.8-billion takeover of CNET Networks would broaden its Internet muscle. The acquisition would help make CBS one of America's 10 most popular Internet companies, the company said.

Media groups like CBS are vying to boost their online assets in part to tap potentially lucrative advertising revenues.

CBS's stock closed down 2.4 percent at 24.23 dollars while CNET's stock rocketed 44 percent to 11.41 dollars.

Billionaire corporate raider Icahn meanwhile announced he has set his sights, and considerable financial firepower, on overhauling the board of Internet search group Yahoo, citing its decision to rebuff Microsoft's merger overtures.

Icahn said in an open letter to Yahoo's board that he had acquired 59-million Yahoo shares and formed a 10-person slate to run for election against the current board.

The billionaire said a combination between Microsoft and Yahoo "is by far the most sensible path for both companies."

Yahoo's stock ended up 2.3 percent at 27.75 dollars. Microsoft was 1.7 percent higher at 30.45 dollars.

Bernanke, in a speech in Chicago, urged banks to boost their capital cushions and improve their risk management policies amid a lingering credit squeeze that has ended an era of easy credit.

The Fed chief reassured investors that the central bank was keeping a close watch on market developments, "particularly in light of the ongoing fragility of market conditions."

On the economic front, the government reported that weekly claims for unemployment benefits rose by 6000 to 371 000 for the week ended 3 May. The gain in claims was in line with most analysts' expectations.

Oil prices continued roiling at high levels, as a benchmark crude contract traded in New York closed down 10 cents at 124.12 dollars a barrel. Prices hit a record just short of 127 dollars in Tuesday trading.

Bond prices rose as the yield on the 10-year US Treasury bond fell to 3.843 percent from 3.938 percent on Wednesday and that on the 30-year bond dropped to 4.576 percent against 4.637 percent. Bond yields and prices move in opposite directions.

European shares showed little movement. London's FTSE 100 index rose 0.58 percent to close at 6251.80, while in Paris the Cac 40 gained just 0.04 percent to 5057.51 and the Frankfurt Dax shed 0.03 percent to 7081.05.

AFP