NEW YORK (Reuters) - Microsoft Corp. (MSFT.O) shares rose in early trade on Monday amid optimism on Wall Street about the appointment of a mediator in the government's antitrust action against the big software maker.

Microsoft, a component of the Dow Jones industrial average (.DJI), was up 4 at 90 on the Nasdaq stock market and was the market's most active issue.

On Friday, U.S. District Court Judge Thomas Penfield Jackson took a fresh tack to resolve the landmark antitrust suit against Microsoft, naming a highly respected appeals court judge, Richard Posner, to mediate.

''Selecting Posner, a conservative on antitrust, as a mediator could benefit Microsoft,'' Michael Kwatinetz, an analyst at Credit Suisse First Boston, said in a report.

''We believe the 'DOJ (Department of Justice) discount' could decline,'' he said, referring to the toll the government suit has taken on Microsoft's share price.

Kwatinetz re-emphasized his ''strong buy'' rating on Microsoft shares.

PaineWebber analyst Don Young said Posner's appointment was ''finally some good news on the Microsoft front.''

In a report, he said Posner was ''likely to be far more favorable'' to the company.

Young said the next legal event could be a strong ruling by Jackson against Microsoft, in February or March. But he said Posner's appointment raised the ''real possibility'' of a settlement.

Posner, 60, heads the U.S. Court of Appeals in Chicago and is one of the most respected U.S. jurists. He is a leading proponent 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.

Lehman Brothers analyst Michael Stanek said both the government and Microsoft would face ''enormous'' pressure to settle.

He said the likely outcome would be a change in Microsoft's behavior, not a breakup of the company.

Jackson's appointment of Posner came two weeks to the day after Jackson found that Microsoft gad used monopoly power to harm consumers, competitors and other companies. Microsoft has 90 percent of the market for personal computer operating systems.

The New York Times reported on Monday that lawyers would file a class-action suit against Microsoft on behalf of millions of Californians. The suit will allege that the company used its monopoly power to overcharge buyers of Windows 95 and Windows 98, the newspaper said.