Yahoo shares gained more than seven percent on Wall Street on Tuesday amid reports former AOL chief executive Jonathan Miller was trying to raise money to purchase the Internet company.

Yahoo's stock gained 7.08 percent to close at 11.50 dollars after The Wall Street Journal, citing "people familiar with the matter," reported that Miller was seeking to buy some or all of the Sunnyvale, California, company.

The Journal said Miller has been talking to private equity investors and sovereign wealth funds for months about raising money for a Yahoo purchase.

It said the current status of the talks was unclear.

The newspaper said that Miller, who headed AOL from 2002-2006 and is now a partner with venture capital firm Velocity Interactive Group, believes he can do a deal that would be worth 20 to 22 dollars a share to Yahoo shareholders.

That would involve raising about 28 billion to 30 billion dollars to purchase the entire company, it said.

The Journal quoted "sources close to Yahoo" as expressing "deep skepticism" that Miller would manage to line up the necessary investors, particularly amid the current credit crunch.

It said it was unclear whether software giant Microsoft Corp., which made its own bid for Yahoo, would be involved in any potential deal.

Microsoft offered 33 dollars a share for Yahoo earlier this year but the offer was rejected by Yahoo co-founder and chief executive Jerry Yang, drawing the ire of many shareholders.

Yang announced last month that he was stepping down as CEO.

Microsoft chief executive Steve Ballmer has ruled out making another bid for Yahoo, but said he remains open to a partnership on Internet search.

Yahoo has been losing ground on the Internet to companies such as Google and social networks like MySpace and Facebook and the economic slowdown has hit the firm particularly hard as advertisers cut back on spending.