NEW YORK/LONDON (Reuters) - Investors in Yahoo Inc latched onto hopes the company could resume talks with Microsoft Corp, though an executive at the software maker cast doubt on Tuesday about any return to a deal.

Shares in Yahoo rose 4.4 percent, partially recovering from a 15 percent slide on Monday after Microsoft withdrew its $47.5 billion bid for the Internet company in an effort to create a real competitor to Google Inc.

Yahoo Chief Executive Jerry Yang told Reuters on Monday that he had "mixed feelings" about events over the weekend, when talks broke down, and was still open to talks.

Microsoft had sweetened its offer to $33 per share from an initial $31 per share, but Yang held out for a price closer to $37 per share.

Asked if Yahoo would still leave a door open for Microsoft to return, Yang said: "If they have anything new to say, we would be open. ... I am more than willing to listen."

Yang also stressed that he has been ready to negotiate and find common ground when Microsoft ended the talks abruptly.

But a Microsoft executive said on Tuesday the company had reached the "end of the story" with Yahoo and will focus on its own strategy to be a leader in Internet services.

"We decided to move on and basically withdraw our offer, the president of Microsoft International, Jean-Philippe Courtois, told Reuters in London.

Asked if that was the end of the story with Yahoo, he replied:

"Absolutely, that's the end of the story. We are moving on because our strategy is very clear."

Yahoo shares rose $1.10 cents to $25.47 after trading as high as $25.64 earlier in the session. Microsoft rose 1.2 percent to $29.43.

A SOFTER STANCE?

Yang's softer stance came as two of Yahoo's largest shareholders independently told The New York Times they would have been happy with a deal at $34 per share.

"I am extremely angry at Jerry Yang and at the so-called independent board," Gordon Crawford, portfolio manager for Capital Research Global Investors, the largest Yahoo shareholder, with some 16 percent of stock, told the newspaper.

Crawford's sway over media companies is legend. In 2002, he mounted a campaign to force the resignation of AOL Time Warner Chairman Steve Case, the architect behind one of the worse corporate mergers of its era. Case resigned in January 2003.

In an apparent effort to rein in a shareholder revolt, Yahoo said it would hold its annual shareholder meeting on July 3. It set a May 15 deadline for nominating candidates to the board, giving dissident shareholders just over a week to launch a proxy fight.

Yang maintained that even Microsoft's sweetened offer did not value Yahoo properly for its Web search advertising technology, its prominence in selling display ads and its lucrative overseas holdings.

Some analysts said Yahoo shares could have fallen closer to $19.18, its price before Microsoft made its bid public on February 1. But the descent on Monday was cushioned by investors who are betting Microsoft will eventually come back to the table.

"This is going to play out over the next several months and there is still a chance Microsoft will buy the company for somewhere around $33 a share," said Todd Dagres, general partner at venture capital fund Spark Capital.