(Agencies)
Updated: 2008-05-06 06:55

FRANKFURT - Stock index futures pointed to a weaker opening on Wall Street on Monday, with Yahoo Inc (YHOO.O) in focus after Microsoft Corp (MSFT.O) walked away from its $47.5 billion bid for the Internet search company.

Traders work on the floor of the New York Stock Exchange in this April 1, 2008 file photo. [Agencies]

Dow Jones futures were down 0.4 percent, S&P 500 futures were down 0.5 percent and Nasdaq futures 0.5 percent lower.

Microsoft on Saturday sweetened its initial $31-per-share offer for Yahoo to $33, but then withdrew from the talks when Yahoo Chief Executive Jerry Yang dug in for a price of $37.

Yahoo shares fell 18.9 percent to 14.68 euros in Frankfurt by 6:22 a.m. EDT (1022 GMT), while Microsoft (MSFT.F) rose 3.9 percent.

Yahoo shares closed at $28.67 on Friday on Wall Street.

"Yang is certainly under a lot of pressure now," said Roland Hirschmueller, an equities trader at German brokerage Baader. "His days are numbered if he doesn't manage to come with an alternative strategy."

Google (GOOG.O) could be the big winner from the end of Microsoft-Yahoo talks as sources familiar with the matter said Yahoo was likely to push for an advertising partnership with the Web search leader. A tie-up with Google should help boost Yahoo's operating performance in the near term.

Google shares (GOOGa.F) rose 2.1 percent in Frankfurt.

Yahoo is also still considering a deal with other Internet media and advertising majors such as Time Warner Inc's (TWX.N) AOL, people familiar with the discussions said.

Elsewhere on the merger and acquisition front shares in Sprint Nextel (S.N) (S.F) rose 11 percent in Frankfurt after media reports said Deutsche Telekom (DTEGn.DE) was looking at a possible purchase of the U.S. wireless company.

However, traders expressed some skepticism that such a deal was politically feasible. Deutsche Telekom shares dipped 0.8 percent.

Later in the session the Institute for Supply Management is due to release its April non-manufacturing index at 1400 GMT. Economists in a Reuters survey forecast a PMI reading of 49.1 versus 49.6 in March.

On Friday U.S. stocks made modest gains after jobs data that offered fresh evidence the economic slowdown is not as severe as feared, but technology shares faded on a surprise loss from Sun Microsystems Inc (JAVA.O).

The Dow Jones industrial average (.DJI) ended the session up 0.4 percent, the Standard & Poor's 500 Index (.SPX) was up 0.3 percent and the Nasdaq Composite Index (.IXIC) fell 0.2 percent.