Hopes that Yahoo’s plan to replace Jerry Yang as chief executive would clear the way for a deal with Microsoft lifted the struggling internet company’s shares on Tuesday.

Mr Yang, who was widely criticised by shareholders for failing to agree on terms for a Microsoft takeover this spring, will step down as soon as a replacement is found, Yahoo announced late on Monday. The company’s co-founder will return to his previous role of chief Yahoo, which does not hold direct executive responsibility, it added.