Medtronic, Covidien shares jump in heavy volume on deal reassurance

NEW YORK (Reuters) - COVIDIEN (COV.NY)Plc and MEDTRONIC (MDT.NY)Inc both rallied on Friday, with the names moving on heavy volume after Medtronic affirmed its commitment to buy Dublin-based Covidien.

Medtronic did change the structure of the deal, saying it would use $16 billion in debt rather than cash held overseas, reacting to changes made by U.S. tax authorities to cut the benefits of such "inversion deals."

Shares of Medtronic were up 3.7 percent to $65.11, moving on volume of about 22.9 million shares, well above its 50-day average of 7.8 million and putting it on track for its most active day since June 16, the first session after the deal was announced.

Covidien added 5.8 percent to $93.95 in its biggest one-day advance since the deal was announced. It was one of the S&P 500's biggest percentage gainers on Friday, and volume of about 16.4 million shares was many times its 50-day average of 4.4 million.

Index snapshot at 12:46 EDT:

* S&P 500 was rising 22.99 points, or 1.18 percent.

* Nasdaq Comp was gaining 53.93 points, or 1.22 percent.

* Dow industrials was adding 204.57 points, or 1.22 percent.

* Russell 2000 was adding 13.31 points, or 1.21 percent.

* S&P MidCap was adding 12.61 points, or 0.93 percent.

* S&P SmallCap was gaining 7.02 points, or 1.11 percent.

(Editing by Bernadette Baum; Editing by Meredith Mazzilli)