Steve Ballmer, the Microsoft Chief Executive, stated a Web search ad deal with Yahoo makes economic and business sense (and may still be possible), though the two firms are currently not in any discussions.

Yahoo shares jumped by 17% as investors hoped the comments could lead to the two firms returning to negotiations. The gains were lost after Microsoft released a statement it had no interest in buying Yahoo. Talks between the two firms broke down in July this year after Yahoo rejected a proposal from Microsoft to buy its search ad business.

Yahoo had rebuffed an acquisition bid in May. Instead, it signed a search ad pact with Google that is being scrutinised by regulators. Ballmer told a Gartner conference in Orlando, Florida:

“There will continue to remain opportunities to (find) partner around search. We are not in any discussions with them. We shall see! They want to remain independent. But there are still opportunities around search. It would make sense economically for their shareholders and ours.”