Shares of Toshiba Corp rose 1.2 percent on Monday after a company source said it was planning to abandon its HD DVD format, allowing the Blu-ray technology backed by Sony Corp to become the standard for the next-generation DVD.

Shares of Sony opened up 1.65 percent at 4,930 yen, while Matsushita Electric Industrial, a key Blu-ray supporter, fell 0.7 per cent.  A source at Toshiba said that the electronics conglomerate was planning to give up on the HD DVD format after losing the support of several movie studios including Warner Brothers and key retailers.

Toshiba, which led a consortium promoting HD DVD, would suffer losses of hundreds of millions of dollars to scrap production of its equipment and other steps to withdraw from the business after losing out to the Blu-ray camp headed by Sony, Japanese public broadcaster NHK reported.

While keen on a new format DVD that can hold more content and produce higher-quality pictures, movie studios and retailers want a single format that would avoid the cost of producing and stocking two different types of DVD.

Shoppers, faced with two formats and movies that might only play on one or the other, have tended to buy neither at a time when the entertainment industry was hoping the new generation discs would revive the $24 billion home DVD sector.

An end to the war means consumers can now be sure they won't be stuck with a 21st century equivalent of Betamax - Sony's videotape technology that lost out to VHS in the 1980s.

Shares of Toshiba were up 1.2 percent at 794 yen as of 0002GMT after opening up 0.3 percent. The benchmark Nikkei average was up 0.1 percent.-Reuters