• by Mark Walsh  @markfwal, April 11, 2009

Yahoo and Microsoft have renewed talks about partnering on possible search and advertising deals after breaking off merger and related negotiations last year, according to reports Friday. The news could give Yahoo's stock a boost Monday.

Yahoo CEO Carol Bartz and Microsoft CEO Steve Ballmer met recently to begin exploring how the companies might combine their ad businesses. One option could involve Microsoft selling search ads for Yahoo, while Yahoo sells display ads on Microsoft's online properties.

Both Yahoo and Microsoft declined to comment on the talks. But Ballmer had expressed an interesting in resuming talks about a search deal with Yahoo since Bartz replaced Jerry Yang as the Web portal's CEO in January.

Microsoft is preparing to relaunch its search engine under the working name Kumo this summer. Working on the project are a number of former Yahoo executives and technologists including Qi Lu, who now heads Microsoft's overall online efforts.

By joining forces, Yahoo and Microsoft could potentially pose a more serious challenge to Google, which controls about two-thirds of the search market. The resumption of talks between the two companies was first reported by the D: All Things Digital blog Friday.