Sector Snap: most major Web stocks dip

Yahoo shares rose $1.30, or 6.4 percent, to $21.50. On Tuesday, the stock traded as low as $19.59 during the day--its lowest point before Microsoft's initial bid to buy the company was announced on Feb. 1.

Citing people involved in the talks, the paper reported Microsoft is looking again at acquiring Yahoo's search business and has spoken with companies including Time Warner Inc. and News Corp. about completing some sort of deal that would essentially lead to the company's breakup.

The paper said sources called the talks preliminary and unlikely to lead to a deal with Yahoo. A Microsoft spokesperson declined to comment.

After withdrawing its final $47.5 billion offer to buy the company in its entirety in May, Microsoft proposed buying Yahoo's search engine and a 16 percent stake in Yahoo's remaining operations for $9 billion. Yahoo rejected that offer, too, and instead reached an advertising deal with rival Google Inc.

Google's shares declined $2.05 to $536.78 in afternoon trading.

In a note to investors, Jefferies & Co. analyst Youssef Squali reiterated his "Buy" rating and $600 price target on Google shares, as well as his prediction for a strong second quarter.

Squali cited "robust" year-over-year paid click growth in April and May--based on his analysis of data from comScore Inc.--and expectations for strong international growth and gains in monetization from improvements in search quality.

Paid clicks refer to advertisements accompanying Google search results which users click on.

Meanwhile, shares of online retailer Amazon.com Inc. fell 71 cents to $72.91, while shares of online auctioneer eBay Inc. declined 38 cents to $27.36.