NEW YORK (Reuters) - Microsoft Corp on Monday said it would be willing to reopen talks to buy all or part of Yahoo Inc , but only if a new Yahoo board is elected, a major boost for investor Carl Icahn's board slate.

Microsoft, which broke off talks in early May to buy the Internet company for $47.5 billion, said it would enter into talks immediately if a new board were elected at Yahoo's August 1 stockholder meeting.

Billionaire financier Icahn, a major Yahoo shareholder who is running a slate of candidates to replace the Yahoo board, said in an open letter released on Monday that he had spoken frequently with Microsoft CEO Steve Ballmer over the last week.

"Steve made it clear to me that if a new board were elected, he would be interested in discussing a major transaction with Yahoo," including purchasing either its "search" function with large financial guarantees, or an outright purchase of Yahoo, said Icahn.

Microsoft said it would be premature to discuss details, such as the price it might offer for Yahoo. It's latest offer was $33 per share, but Yahoo demanded $37.

The news sent Yahoo shares up more than 10 percent in early trading on Nasdaq, up $2.22 to $23.57. Microsoft shares were up 29 cents to $26.27.

Icahn has been highly critical of the Yahoo board and its CEO Jerry Yang in recent months, claiming the company "botched" negotiations with Microsoft.

Icahn said he would immediately move to replace Yang if his board slate were elected at the August meeting.

(Reporting by Dane Hamilton; editing by John Wallace) © Copyright 2008 Reuters.

Microsoft, which broke off talks in early May to buy the Internet company for $47.5 billion, said it would enter into talks immediately if a new board were elected at Yahoo's August 1 stockholder meeting.

Billionaire financier Icahn, a major Yahoo shareholder who is running a slate of candidates to replace the Yahoo board, said in an open letter released on Monday that he had spoken frequently with Microsoft CEO Steve Ballmer over the last week.

"Steve made it clear to me that if a new board were elected, he would be interested in discussing a major transaction with Yahoo," including purchasing either its "search" function with large financial guarantees, or an outright purchase of Yahoo, said Icahn.

Microsoft said it would be premature to discuss details, such as the price it might offer for Yahoo. It's latest offer was $33 per share, but Yahoo demanded $37.

The news sent Yahoo shares up more than 10 percent in early trading on Nasdaq, up $2.22 to $23.57. Microsoft shares were up 29 cents to $26.27.

Icahn has been highly critical of the Yahoo board and its CEO Jerry Yang in recent months, claiming the company "botched" negotiations with Microsoft.

Icahn said he would immediately move to replace Yang if his board slate were elected at the August meeting.

(Reporting by Dane Hamilton; editing by John Wallace) © Copyright 2008 Reuters.