ROANOKE, Va. ( TheStreet) -- Luna Innovations ( LUNA) shares jumped higher at midday Thursday on a surge in volume after the company received a grant for electrochemical capacitors.

Luna Innovations was lately up 34 cents, or 17.8%, to $2.25 on volume that topped 1.1 million shares. The stock has a three-month average daily volume of 452,000, according to Yahoo! Finance.

The spike in share price and volume came after reports that the Department of Energy listed Luna as receiving a grant for a project that will develop high energy and high power capacitors suitable for use in hybrid electric vehicles.

A telephone call to Karin Clark, director of marketing and communications for Luna Innovations, was not immediately returned.

Luna Innovations has a 7.7 million-share float with about 2,000 shares short as of Sept. 10, according to Yahoo! Finance. More than 44% of the company's shares are held by insiders with another 4.9% owned by institutions.

Luna Innovations shares have seen above-average volume over the last 10 trading sessions, sparked by a report in The Roanoke Times that Luna and Hansen Medical ( HNSN) "have developed a framework for settlement" that would reduce a $36.3 million jury verdict against Luna to a more manageable sum, according to a letter written to bankruptcy court Judge William Stone from attorneys on both sides of the case.

In 2006, Luna was set to apply its nanotechnology instruments to assist Hansen in developing catheters used for heart surgery, but the deal fell apart after Hansen accused Luna of sharing trade secrets with another company. A jury eventually ruled against Luna, and the company filed for Chapter 11 bankruptcy protection in July.

Read more about today's high-volume stocks like Euro Tech Holdings in earlier "Pump Up the Volume" posts.

-- Written by Robert Holmes in New York.

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