Small-cap stocks rode high Thursday along with the rest of the market, and among the big winners was

Traffix

(TRFX)

.

Shares of the media-and-marketing firm catapulted 33.2% after it agreed to a stock swap merger with

New Motion

( NWMO) valued at some $10.59 a share. Traffix holders will own 45% of the combined company. The deal should close by the first quarter. Pearl River, N.Y.-based Traffix surged $1.58 to $6.34. New Motion, which trades on the OTC Bulletin Board, slid 4.2% to $14.85 in thin trading.

Also rocketing on M&A news was jewelry retailer

Finlay Enterprises

( FNLY), which traded up 24% to $3.89 after agreeing to buy

Zale's

(ZLC)

TST Recommends

luxury-market division, Bailey Banks & Biddle. The deal is worth $200 million, plus an inventory adjustment at closing and certain liability assumption.

New York-based Finlay, which operates Finlay Fine Jewelry, estimates EPS accretion of more than 20 cents in fiscal 2008. The transaction should close by the end of October. Zale tacked on 2.8% to $24.25.

Elsewhere, Minnesota's

MGI Pharma

( MOGN) climbed 5.1% after a Friedman Billings analyst predicted that three key drugs will push its full-year revenue past $1.1 billion by 2012, which would compare with fiscal 2006's $342.8 million. Shares lifted by $1.34 at $27.85.

That helped buoy the Russell 2000 and the S&P SmallCap 600 -- lately up 0.4% and 0.3%, respectively -- along with gains at fellow biopharma company

Parexel

(PRXL)

.

The Boston-based outfit boosted the low end of its prior fiscal-first-quarter profit guidance by a penny to between 33 cents and 34 cents a share. Parexel also lifted the low end of its service-revenue outlook by $3 million, now projecting a $203 million to $210 million range. The company attributes this to the closing of its Apex International Clinical Research buyout and "a strengthening operating environment." Shares added 3.3% to $41.75.

On the other hand,

Optimal Group

( OPMR) slid 9.2% on word it will take out Hong Kong-based WowWee -- a maker of consumer robotic, toy and electronic products -- for $65 million. The deal will consist mostly of cash, in addition to stock and warrants. Shares of the Canada-based payment-and-services company were trading at $5.41.