AT&T Inc will start selling Palm Inc's mobile phones in a few months, Palm said on Monday, as it looks to expand distribution and raise consumer awareness of its phones.

Palm's stock has suffered amid questions over its ability to survive in a tough market dominated by bigger rivals [ID:n19165207], but its shares rose 5 percent to $4.21 in morning Nasdaq trading.

Palm said its Palm Pre Plus and Palm Pixi Plus will be available in AT&T stores in the coming months, for $149.99 and $49.99, respectively, with a two-year service contract, and after a $100 mail-in rebate.

Separately, AT&T said it also will soon unveil Dell Inc's first smartphone available in the United States, the Aero. The Aero is based on Google's Android mobile operating system.

Dell's smartphone was formally announced late last year and is currently available only in China and Brazil. Dell is making a big push into communication devices as its core personal computer business struggles.

AT&T is the No. 2 U.S. mobile service.

(Reporting by Franklin Paul, additional reporting by Gabriel Madway; editing by Gerald E. McCormick and Maureen Bavdek)

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