The judge overseeing the government's antitrust case against


(MSFT) - Get Report

has granted the company more time to seek a settlement and will withhold his verdict for up to 10 days, people close to the negotiations said Tuesday.

The software company first convinced the appointed mediator, Judge Richard Posner of the

7th Circuit Court of Appeals

, that it is making significant progress in satisfying demands from the

Department of Justice

and 19 states that filed the antitrust case, these people said.

Taking Posner's cue, U.S. District Judge Thomas Penfield Jackson has approved an extended negotiating schedule, backing away from a previously declared deadline that he would issue a verdict Tuesday. The revised schedule allows negotiations to continue until April 7, these people said, speaking on background and on the condition they not be identified.

The court confirmed no verdict will be issued today.

Microsoft, the Department of Justice and state attorneys general declined to comment on the settlement negotiations Tuesday.

Microsoft's shares rose 3 1/16, or 3%, to 107 1/8 in midday trading Tuesday. (Microsoft's shares closed up 1/4, or 0.2%, to 104 5/16).

Private negotiations between Microsoft and the Justice Department began in the fall after Jackson named Posner to mediate the talks.

In the case, the government contends that Microsoft monopolizes the market for operating systems and employs predatory tactics to maintain and expand its monopoly.

A settlement could include opening the Windows operating system source code for competitors to view while designing applications, accepting regulatory oversight or a combination of the two options. Several states have pushed for splitting up the company into two or three separate units.

Strong incentives to settle exist for both sides. For Microsoft, any ruling that the company is a predatory monopolist could be used against it in civil and class action cases brought by customers and competitors. For the Department of Justice, a lengthy appeals process would likely last through the presidential election.

But because of the tone of his findings of fact in the case in November, any verdict from Jackson is widely expected to find the company has violated antitrust laws.

On Friday, Microsoft offered a settlement plan to provide versions of its Windows operating system software without the Internet Explorer Web browser, a concession that would address the government's charge that the company illegally bundled the products.

The company also offered to charge a set price for Windows, a capitulation intended to assuage charges that it penalized certain computer makers with higher prices. Determining how those agreements would be enforced remains a major sticking point in negotiations.

State attorneys general remain divided. Some find the company's offer appealing; some, who favor a breakup of the company, are holding out for a verdict; while others are simply paying little attention to the negotiations.

Throughout the process, speculation about an ending to the highly secretive talks have emerged repeatedly since November, prompting market players to swing the company's stock price back and forth across a tight 20-point playground. The stock did not break out of that range -- from the low 90s to the low 110s -- Monday.

Last week, reports that a settlement was imminent fueled a 16% run from the March 20 opening price of 98 3/4 to a Friday high of 115.