Steve Ballmer, Microsoft's chief executive, on Friday said emphatically his company would not bid for Yahoo again, following comments by the embattled internet company's chief executive which added to the belief that Yahoo was seeking a return to negotiations.

Mr Ballmer, addressing a conference in Sydney, said there were still opportunities for future partnership based on the two companies' internet search engines, but he poured cold water on expectations of a Microsoft takeover of Yahoo.

Yahoo has come to what Wall Street believes is a strategic dead-end after a search deal with Google, which would have let the search group place some of the advertising on Yahoo's search results, collapsed this week because of antitrust concerns.

In May, Microsoft abandoned its three-month pursuit of a full acquisition of Yahoo after Yahoo rejected a sweetened offer valuing it at $33 a share, or $46.5bn, and instead held out for $37 a share.

Later negotiations to combine part of their online businesses also fell apart. But since news of the Google deal collapsing, analysts have expected Microsoft to return to the fray, especially when Yahoo's co-founder Jerry Yang appeared to offer on Wednesday a direct overture to Microsoft to resume the talks that collapsed in May.

"We made an offer... We made another offer. It was clear that [Yahoo] doesn't want to sell the business to us and we moved on. We tried at one point to do a partnership around search, not an acquisition. And that didn't work either, and we moved on... and they moved on... We are not interested in going back and relooking at an acquisition. I don't know why they would be either, frankly. They turned us down at $33 a share ... I'm sure there are still opportunities for some kind of partnership around search."

Mr Yang was speaking in San Francisco hours after his company's search alliance with Google had collapsed.

"To this day, I would say that the best thing for Microsoft to do is to buy Yahoo," he said, in answer to a question at the annual Web 2.0 Summit. "I don't think that's a bad idea at all, I think at the right price, whatever that price is."

His comments led Yahoo's shares to buck the trend of a falling stock market on Thursday to close up 0.3 per cent at $13.96.

Mr Ballmer's remarks did not contradict Microsoft's official position. He indicated last month he might be willing to resume talks, saying in response to a question at a conference that he still saw the logic in a combination with Yahoo. But Microsoft quickly played down his comments and insisted that the company had no intention of resuming talks.