UPDATE 1-RESEARCH ALERT-Citi upgrades Yahoo to hold from sell

(Recasts; adds details, stock movement)

May 6 (Reuters) - Citigroup upgraded Yahoo Inc (YHOO.O) to "hold" on Tuesday, a day after it downgraded the Internet company to "sell" from "buy" on valuation concerns.

In a research note to clients, Citigroup said on May 5, Yahoo shares opened lower than the brokerage's expectations and have since remained below its price target of $26. Thus, Citigroup changed its rating on the stock to "hold."

Shares of Yahoo were up 5 percent at $25.60 in afternoon trade on Nasdaq. The shares were up on hopes that the company would either resume talks with Microsoft Corp (MSFT.O) or forge a deal with Google Inc (GOOG.O).

Microsoft had on Saturday walked away from its bid to buy Yahoo. (Reporting by Esha Dey in Bangalore; Editing by Vinu Pilakkott)