UPDATE 2-Microsoft seen as winner as big media circles Yahoo

(Adds board deliberation details; bylines)

By Tiffany Wu and Anupreeta Das

NEW YORK, April 10 (Reuters) - Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) may have played its top two cards by pulling out possible deals with AOL and Google, but it does not seem to have changed Wall Street's view that Microsoft will eventually win the takeover battle.

Yahoo announced on Wednesday a test to outsource Web search advertising to Google Inc (GOOG.O: Quote, Profile, Research, Stock Buzz). Sources say the test is part of a planned three-way alliance to combine Yahoo with Time Warner Inc's (TWX.N: Quote, Profile, Research, Stock Buzz) AOL instead of Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz).

But hours later, the world's largest software company appeared to trump Yahoo's announcement as the New York Times reported that Rupert Murdoch's News Corp (NWSa.N: Quote, Profile, Research, Stock Buzz) was in talks to join Microsoft's $42.3 billion bid for the Web pioneer.

"Everyone is just exploring. The best option is to accept the Microsoft deal," said fund manager Mike Binger at Thrivent Financial in Minneapolis, which owns small stakes in Yahoo and Microsoft.

Binger said an AOL-Yahoo merger made no sense. "I just see Yahoo as a mature brand and AOL as a declining brand," he said. As of Dec. 31, Thrivent owned about 1.5 million Yahoo shares, or 0.11 percent, and about 6.3 million Microsoft shares, or 0.07 percent, according to regulatory filings.

The Wall Street Journal reported the Yahoo board would meet on Friday but said no big decisions were likely until at least next week. A Yahoo spokeswoman declined to comment.

A source familiar with the board's activities told Reuters that Yahoo directors meet to discuss the Microsoft offer and alternatives to it as many as three times a week.