Updated from 11:21 a.m. EDT

Shares of

Palm

(PALM)

, the handheld computer maker, and those of its parent company,

3Com

(COMS)

, climbed Friday on news that Palm will replace the computer networking equipment maker in the

S&P 500 Index

.

Standard & Poor's

said Palm would replace 3Com in the S&P 500 Index after the close of trading on July 27. 3Com said it would spin off its 94% interest in Palm to 3Com shareholders in a deal expected to close the same day.

3Com will replace

Burlington Industries

(BUR)

in the

S&P MidCap 400 Index.

Shares of Santa Clara, Calif.-based Palm, which went public March 2, Palm finished up 1 9/16, or 4.25%, at 38 5/16, after trading as high as 40. 3Com, which is also based in Santa Clara, closed up 1 3/8, or 2%, at 68, after trading as high as 69 1/2.