Yahoo shares rise as Microsoft hopes revive

Yahoo's steadily sinking stock pulled out of its descent on reports that the internet pioneer is reconsidering its recent decision to fall into the arms of Google instead of Microsoft.

An Associated Press report also said the prospect of Yahoo spurning Google in favor of an alternative deal with Microsoft cheered investors still disillusioned with Yahoo's rejection of a €30.2 billion (US$47.5 billion) takeover offer from Microsoft.

Yahoo shares climbed 2.8%, the stock's largest one-day gain in two weeks, the report said.

The shares have been shriveling since Yahoo announced it will use Google's superior technology to show some ads on its web site in the US.

When it embraced Google, Yahoo terminated talks with Microsoft about a sale of the entire company as well as a more limited deal focused on Yahoo's search engine. That led to a 16% drop in Yahoo's market value, making it even harder for Yahoo board's to justify its decision to turn down Microsoft's last takeover offer.

Yang is now under intense pressure to prove Yahoo is worth as much as he thinks while also trying to fend off a shareholder revolt being led by activist investor Carl Icahn.

To make matters worse, Yahoo is facing a leadership vacuum created by the departures of several top executives and engineers. The Sunnyvale-based company is expected to address the exodus in a reorganization to be announced this week.

The backlash to the Google alliance may have prodded Yahoo to rekindle talks to sell its search operations to Microsoft.