SHANGHAI/NEW YORK (Reuters) - Chinese Internet firm Alibaba is set to speed up plans to buy back a near 40 percent stake owned by Yahoo Inc (YHOO.O: Quote, Profile, Research), as Microsoft Corp (MSFT.O: Quote, Profile, Research) threatens to go hostile with a lower bid for Yahoo.

Alibaba, keen to calm Beijing's fears that Microsoft's planned $42 billion takeover of Yahoo would increase foreign influence over China's leading Internet firms, wants to fund a buyback of all or part of the 39 percent stake Yahoo owns, said a person familiar with the Chinese firm's plans.

Analysts said this could come from a mix of foreign and local financial investors, including Chinese pension funds or state-backed firms looking to enter the Internet sector.

"Jack's number-one thing is to maintain control," said Hany Nada, managing partner of Granite Global Ventures, an early institutional investor in Alibaba, referring to the group's Chief Executive Jack Ma.

Alibaba plans to exercise its 'right of first offer' on the stake, which is stated in a 2005 agreement with Yahoo, should the two U.S. firms reach a deal, a source told Reuters earlier.

The 'right of first offer' states that Yahoo cannot transfer its Alibaba stake without first offering it to other shareholders. Alibaba believes any change of control at Yahoo, including a deal with Microsoft, would amount to such a transfer, the source said.

LOSING OUT

Alibaba may be unwilling to rule out potential business opportunities with Microsoft, for example in advertising or online trading, that would be lost if it were to buy back its stake from Yahoo.

If that were to happen, the U.S. software giant also could miss a chance to expand its foothold in the world's largest Web market by users.

"Alibaba is peripheral to the potential Microsoft/Yahoo transaction, but its decision will create an impact on Microsoft's deal because Alibaba is an important strategic presence for Yahoo in Asia, and Alibaba has global aspirations," said Duncan Clark, chairman of Beijing-based research firm BDA.

Another thorny factor is valuation.

Yahoo has so far rejected Microsoft's unsolicited takeover bid as too low, in part because Yahoo sees its Asian operations as strategically valuable.

Any offer on the stake in Alibaba -- particularly if it is broken up and sold to several investors -- will likely go through a complicated arbitration process to determine the offer's value.

Perhaps the most important factor is whether Alibaba is able to line up financial support to buy back its stake from Yahoo.

Possible candidates include Chinese pension funds, or even one of the country's state-backed telecoms companies looking to move into Internet services, said Claus Mortensen, analyst at IDC's Asia/Pacific Emerging Technologies Research.

Alibaba's other major shareholder, Japan's Softbank (9984.T: Quote, Profile, Research), which holds a 33 percent stake, is unlikely to buy Yahoo's stake as it is heavily in debt after buying Vodafone's (VOD.L: Quote, Profile, Research) Japan unit two years ago.

"There's no way we could raise funds in this environment. We bought Vodafone (Japan) just in the nick of time. We were lucky," said a Softbank contact, who declined to be identified because he was not authorized to speak on the matter.