Shares in Asian Internet firms soared as much as 20 per cent on Monday after Microsoft Corp’s bid for Yahoo Inc spurred hopes for industry realignment and brightened investor sentiment. Japanese Web and mobile phone service company Softbank closed up 15.8 per cent at 2,205 yen while Yahoo Japan Corp was up 9.5 per cent at 46,000 yen. Softbank and Yahoo Japan have capital ties with Yahoo Inc, raising speculation of potential business alliances among Microsoft, Softbank and Yahoo Japan.

In China, e-commerce firm Alibaba.com closed up 13.6 per cent at HK$20.35 after rising as high as 20 per cent, while South Korea’s top Internet portal NHN was up 14 percent at 228,000 won and second-ranked Daum Communications rose 9.1 percent to 73,100 won. Japanese virtual shopping mall operator Rakuten Inc followed their regional peers higher, ending up 6.7 per cent at 48,000 yen, and social networking site Mixi Inc rose 7.6 per cent to 1.14 million yen. Some analysts said, however, part of Monday’s rally was a reaction to recent slide in Internet stocks in Asia and their gains may be short-lived. “The market over-reacted. I don’t think the rise can be sustained,” said Conita Chung, head of equity research of Delta Asia Financial Group in Hong Kong.

“The focus will be on any moves towards building up cooperative relations among the three firms,” Nomura Securities said. Softbank owns 3.9 per cent of Yahoo Inc, while Yahoo Japan is owned 41 per cent by Softbank and 33 per cent by Yahoo Inc. Analysts said improved competitiveness at Yahoo Inc would be positive for Yahoo Japan, which shares some of Yahoo Inc’s Internet search technology, and for Softbank, Yahoo Japan’s largest shareholder.