According to the newspaper, both Yahoo and Microsoft declined to comment about the talks.

Talks between the two companies were first reported earlier Friday by All Things Digital, a technology blog site owned by Dow Jones, which said the discussions are "preliminary and wide-ranging," covering advertising as well as search partnerships.

Bartz took the CEO reins of Yahoo in January from the company's co-founder Jerry Yang, who last year rejected Microsoft's offer of47 billion U.S. dollars to buy Yahoo.

Ballmer has said repeatedly that Microsoft is still interested in striking a deal with Yahoo on search business.

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Editor:Yang Jie