Yahoo! Inc. (YHOO) announced on Monday that it has formed an advertising distribution alliance with seven companies representing more than 150 newspapers across the United States.

The Sunnyvale, Calif.-based technology firm will deliver search, graphical and classified advertising to consumers using Yahoo’s HotJobs employment website. No financial terms were disclosed.

We believe the local segment is largely untapped and provides significant opportunities to expand audience engagement and subsequently grow local advertising,” said Terry Semel, chairman and chief executive officer, Yahoo! Inc.

The deal will allow newspapers to get closer to the fast-growing U.S. online advertising market. Bank of America expects the segment to grow from an estimated $3.4 billion in 2006 to $12.4 billion by 2010.

At first, advertisers who list jobs in the newspapers will have the chance to post their classifieds on Yahoo’s job site known as HotJobs. The deal will also call for newspapers to use a co-branded version of HotJobs on their website career sections. Newspaper content will also be distributed through Yahoo search results.

This relationship will significantly extend our local assets to a much wider audience, and gives us the technology required to fulfill the growing demands of advertisers and consumers, William Dean Singleton, CEO of MediaNews Group, and Victor F. Ganzi, president & CEO of Hearst Corporation, said in a joint statement.

The publishers have a circulation in 38 states that includes Belo Corp. (BLC), Cox Newspapers Inc., Hearst Newspapers, Journal Register Co. (JRC), Lee Enterprises Inc. (LEE), MediaNews Group and E.W. Scripps Co. (SSP).

Yahoo’s shares closed down 19 cents or 0.71 percent to settle at $26.72 on the Nasdaq exchange.