Shares of Internet firm AOL Inc rose in a broader market sell off on Friday as talk circulated that it may be an acquisition target for Microsoft Corp.

AOL shares rose as much as 5.8 percent on the New York Stock Exchange. In afternoon trading they were up 46 cents, or 2.2 percent, at $21.46, as the tech-heavy Nasdaq slid more than 3 percent.

AOL, whose web portal currently outsources web search to Google Inc, is in the process of discussing a new web search deal with more than two potential partners, AOL Chief Executive Tim Armstrong told the D8 tech conference this week.

The result of those discussions could be an outright sale of AOL to Microsoft, the Business Insider news website reported on Friday, citing an unnamed source it said was familiar with AOL's strategy.

It's that sort of speculation that is driving the stock higher today, said Clayton Moran, an analyst with Benchmark Co.

AOL and Microsoft declined comment.

Microsoft, whose MSN web portal competes with AOL and Yahoo, has already signed a deal for its Bing search engine to provide online search for Yahoo sites, and is keen to increase its share of the search market.

An outright purchase of AOL would help Microsoft's Bing grow and bring welcome consolidation in the portal market, the Business Insider report said.

While there is strong strategic rationale behind such a deal (it) doesn't seem likely, said Moran. We think Time Warner pursued a sale of AOL prior to spinning it out and wasn't able to find an interested enough buyer.

AOL, which split from former parent Time Warner Inc last year, has a market value of about $2.2 billion.

(Reporting by Bill Rigby and Jennifer Saba; Editing by Bernard Orr)