Yahoo shares up on hope of talks, Google deal

By Michele Gershberg

NEW YORK (Reuters) - Yahoo Inc investors latched on to hopes the company would resume talks with Microsoft Corp or soon forge a deal with Google Inc, sending shares up 6 percent on Tuesday.

Investors are anticipating that Yahoo may give in to pressure from its largest shareholders to reconsider Microsoft's $47.5 billion offer, and noted conciliatory comments from its chief executive, Jerry Yang.

Alternately, Yahoo could strike a pact to outsource some of its search listings to Google to boost its performance. The two are hammering out the details of a potential deal and sharing their plans with antitrust regulators, said a person close to Google.

"There are definitely big accounts stepping in and buying Yahoo on the assumption they will get back to the table," said RBC Capital Markets analyst Ross Sandler. "If they don't, you have one other out, which is the Google outsourcing (deal)."

Yahoo Chief Executive Jerry Yang told Reuters on Monday that he had "mixed feelings" about events over the weekend, when talks broke down, and was still open to negotiations.

"If they have anything new to say, we would be open," he said. "I am more than willing to listen."

Microsoft had sweetened its offer to $33 per share, but walked away from talks on Saturday after Yang held out for a price of $37 per share.

Yang's softer stance came as two of Yahoo's largest shareholders told The New York Times they would have been happy with a deal at $34 per share.