HANOVER, Germany, March 3 (Reuters) - Microsoft Corp still considers its takeover offer for Yahoo Inc, currently valued at about $40.9 billion, to be reasonable despite Yahoo's rejection of the bid, Microsoft's chief executive said.

"We still think the deal makes sense with the price and structure that we announced and we hope that over time that becomes a reality and we're working toward that," CEO Steve Ballmer said at a news conference on Monday.

"There's been a range of dialogue and there's a range of alternatives being considered. I think it's best for me not to get into the detail," Ballmer said at the event in Hanover, Germany, on the eve of CeBIT, Europe's biggest technology fair.

Microsoft officials did not respond to questions asking to clarify whether Ballmer was speaking about dialogue with Yahoo that is ongoing or if he was referring to conversations with Yahoo that took place in the past.

Ballmer declined to say whether he had authorized or would authorize a proxy fight to convince Yahoo shareholders to agree to the deal by nominating a slate of directors to take control of Yahoo's board.

The two companies are at a stand-off in Microsoft's unsolicited bid to acquire Yahoo. Microsoft has offered to buy Yahoo for $31 a share in cash and stock, which Yahoo's board rejected, saying it undervalued the company.

The deal, which would increase its competitiveness against Internet search and advertising giant Google Inc, was originally worth $44.6 billion, but Microsoft's stock slide has pushed down the deal's value.

Microsoft Chief Financial Officer Chris Liddell said nothing has changed in the impasse between the two companies.

"We continue to look at our options," Liddell said at the Morgan Stanley Technology Conference. "There is no news on Yahoo."

Yahoo shares rose 22 cents to $28.00 in Nasdaq trading. The stock is trading 1.5 percent above the deal price, an indication that investors believe Microsoft will sweeten its offer for Yahoo. Microsoft shares were flat at $27.20 on the Nasdaq.

Ballmer said there is a lot of merit in the deal for Microsoft and the company is trying to have "appropriate" levels of engagement with Yahoo shareholders, management and board of directors.

(Reporting by Georgina Prodhan and Daisuke Wakabayashi in Seattle; Editing by Maureen Bavdek)

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