Shares in internet company Yahoo fell 10% after it said attempts to revive a deal with Microsoft had failed.
The shares fell to $22.50, their lowest level since the software giant offered $31 a share for Yahoo in January.
Recent talks between the two sides ended when Microsoft refused to renew its latest $47.5bn(Ј24bn) offer for the whole of Yahoo.
Yahoo is now expected to look for an advertising deal with rival search engine Google.
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Alternative deal
Yahoo refused a new proposal from Microsoft to buy just its online search operations.
“In the weeks since Microsoft withdrew its offer to acquire Yahoo, the two companies have continued to discuss an alternative transaction that Microsoft believes would have delivered in excess of $33 per share to the Yahoo shareholders," Microsoft said in a statement.
"This partnership would ensure healthy competition in the marketplace, providing greater choice and innovation for advertisers, publishers and consumers," the company said.
Yahoo, however, did not want to sell off only one part of the business.
It said such a deal "would not be consistent with the company's view of the converging search and display marketplaces".
The BBC's technology correspondent Rory Cellan-Jones said that according to Microsoft sources the company was no longer interested in a full takeover because Yahoo had been "underperforming" and was losing some of its key staff.
Yahoo's shares closed 10% lower at $23.52, while Microsoft finished 4.1% higher at $28.24.
(BBC)
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