Expected Microsoft bounce seen boosting Wall St

LONDON, April 25 (Reuters) - Shares in U.S. software giant Microsoft Corp (NasdaqNM:MSFT - news) showed a healthy recovery in morning trade in London following their sharp fall the previous day in the wake of disappointing earnings figures announced before the weekend.

Having closed $12-5/16 lower at $66-5/8 on Monday, Microsoft shares traded on the Instinet electronic brokerage system as high as $68-1/2.

Microsoft suffered a double dose of bad news in its previous session. It announced a downbeat outlook on Thursday with revenue growth of 15 percent against forecasts of 20 percent, and was then hit by reports the U.S. Justice Department was seeking to break up the company -- a move Microsoft said it would fight vigorously.

But London dealers said the battered shares had already started to recover, lifting the prospects for U.S. equity markets.

``They're up and active,'' one dealer said, as both S&P and Nasdaq futures ticked steadily higher.

By 1018 GMT, the Globex-traded June contract on the S&P was 2.1 points higher at 1,439.1, while the Nasdaq contract was 13 points up at 3,430, indicating a wider recovery by the technology benchmark.

On Monday, the Nasdaq closed four percent down but dropped as much as eight percent in early trade as Microsoft tumbled. The Dow went in the opposite direction, despite the depressing effect of Microsoft, ending up 0.6 percent.

Elsewhere dealers noted trade in Yahoo Inc (NasdaqNM:YHOO - news) at $116-1/2 against a close of $113-7/8 following weekend speculation in the UK press that the Internet portal was lining up a bid for British publishing group EMAP (quote from Yahoo! UK & Ireland: EMA.L).

Volume was thin but dealers said investors appeared to warm to the thinking behind the rumours.

``If they can put all EMAP's teenage content on their website and tap into that audience then that's got to be a good thing,'' one dealer said.