Amid reports of continuing negotiations about a combination with Time Warner's AOL, Yahoo Wednesday moved to forestall a proxy fight with Microsoft by extending the deadline to nominate opposition candidates to its board of directors.

On the news, shares of Yahoo climbed $.61, or 2.2 percent, to $28.67 in late Wednesday morning trading.

The extension is designed to give Yahoo some breathing room as it seeks alternatives to Microsoft's $44.6 billion acquisition offer.

Yahoo amended its bylaws to extend the nominating deadline from March 14 to 10 days after the announcement of its annual shareholder's meeting. The date of the shareholder's meeting has not been announced.

In a press release, Yahoo said its board of directors continues to seek to "maximize value" for shareholders.

In an accompanying letter to employees filed with the Securities and Exchange Commission, Chief Executive Jerry Yang noted that Microsoft could still choose to name directors, "but our objective here is to enable our board to continue to explore all of its strategic alternatives for maximizing value for stockholders without the distraction of a proxy contest."

Mr. Yang also asked Yahoo employees to focus on their duties and "put aside all the rumor and speculation you may be hearing."

Until the deadline was extended, The Wall Street Journal reported that Yahoo and Microsoft were expected to hold merger negotiations this weekend.

Yahoo's position remains tenuous as it seeks room to maneuver after Microsoft's offer that is favored by several Yahoo shareholders who have filed lawsuits against the company.

As it seeks alternatives to Microsoft's bear hug, Yahoo reportedly has been in talks with Time Warner about folding its AOL unit into Yahoo. Yahoo also reportedly held talks with News Corp. about a combination with its MySpace social network.