Yahoo's stock price bounced on Tuesday as investors flirted with rumours that Microsoft is once again courting the floundering internet pioneer.

Neither company would comment on what, if any, talks are under way, but both firms dismissed the notion Microsoft has a renewed interest in taking over Yahoo.

Microsoft said its position has not changed since it released a 12 June statement saying it is "not interested in rebidding for all of Yahoo" but that an "alternative transaction remains available for discussion".

The US software giant made the statement in response to Yahoo and Google announcing a deal to put the internet search king's expertise to work pumping money from advertising posted next to Yahoo online search results.

Microsoft offered to buy Yahoo for $44.6-billion in stock and cash on 31 January, but withdrew the offer on 3 May, saying Yahoo refused to budge despite the software giant upping its bid to nearly $50-billion.

While searching for a "white knight" to save it from Microsoft's clutches, Yahoo tested using Google's AdSense for Search service for two weeks in April.

The test showed that Google's methods generated more money than Yahoo's advertising platform.

Microsoft was enraged by the experiment and warned that a Yahoo-Google partnership raises anti-trust concerns because it would cover some 90 percent of online advertising.

Analysts believe an alternative deal of interest to Microsoft could involve buying Yahoo's internet search business and merging it with its own in order to better battle Google in that arena.

Reports that Microsoft has renewed its courtship of Yahoo surfaced in technology news blogs and media outlets on Tuesday.

The accounts cite anonymous sources and sometimes contradict each other as to whether Microsoft wants all of Yahoo or just its online search business, and at times reports differed as to whether talks were occurring.

Yahoo's stock price went on a roller coaster ride as investors gambled on which reports to trust.

Yahoo stock that jumped as much as five percent in price gave back about half the gain, finishing the day at approximately $22 a share.

Microsoft stock slipped nearly a percent to $27.73, signalling investors aren't thrilled at the idea of it renewing its failed courtship of Yahoo.

AFP