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Yahoo shares have risen sharply amid rumours that it is about to be bought.

Its shares jumped almost 6% to $17.60 at the start of trading in New York, before dropping back to end 2.2% ahead.

Unconfirmed media reports have claimed that a number of investment firms are preparing a deal that would take Yahoo private.

E-commerce firm Alibaba declined to comment on reports that its chairman had been approached to head a takeover of Yahoo.

Meanwhile, the New York Post said that private equity giant KKR was interested in either taking Yahoo private or helping to finance a deal.

And AOL is also reported to be among the firms eyeing the possibility of buying Yahoo.

AOL has been on a buying spree as it tries to revive itself as an online content company.

It merged with Time Warner in 2001 at the height of the dot-com boom in what is widely seen as one of the most disastrous mergers ever. It was spun off by Time Warner in December into an independent company.