Shares of Palm Inc. vaulted nearly 17 percent Monday afternoon after the beleaguered maker of handheld devices announced that its private equity backer, Elevation Partners, had agreed to pump an additional $100 million into the company.

Palm stock tacked on $.42, or 16.9 percent, to $2.91 after news of the deal under which Elevation will get 100,000 shares of preferred stock that is convertible to common at a price of $3.25 per share, a 31 percent premium to Palm common stock as of the close last Friday.

Elevation, whose best known partners are Silicon Valley veteran Roger McNamee and U2 frontman Bono, previously had amassed 325,000 shares of Palm convertible preferred. The new investment also will give Elevation warrants that could be converted to common stock at $3.25.

Palm, one of the early leaders in the smart phone category, has lost market share in recent years to Apple’s iPhone, Rearch In Motion’s BlackBerry line and phones using Google’s Android operating system. In announcing a $4.64 per share second quarter loss earlier this month, Palm Chief Executive Ed Colligan acknowledged that the company is “working through an undeniably difficult period.”

The company is betting that a new operating system, rumored to be poised for unveiling at January’s Consumer Electronics Show in Las Vegas, will restore some luster to its product lineup. Several of Palm’s Treo models also employ the Window Mobile operating system as an alternative to its aging Palm operating system.