Yahoo not opposed to Microsoft deal -source

NEW YORK, April 6 (Reuters) - Yahoo (YHOO.O: Quote, Profile, Research, Stock Buzz) is not opposed to a deal with Microsoft (MSFT.O: Quote, Profile, Research, Stock Buzz) but Microsoft should pay more than $31 a share if it wants to buy the company, Yahoo plans to say in a letter to Microsoft, a person familiar with the matter said on Sunday.

In the letter to be sent on Monday, Yahoo is also expected to reject Microsoft's suggestion that its business is deteriorating, the person said.

Microsoft Chief Executive Steve Ballmer in a letter to Yahoo's board on Saturday threatened to lower his company's bid and mount a proxy campaign if the Internet company does not agree to a deal in the next three weeks. (Editing by Jan Dahinten)