NEW YORK - Yahoo Inc. (YHOO.O) and eBay Inc.'s (EBAY.O) U.S. partnership could be the first step toward a global alliance that would be far more rewarding than a solely domestic agreement, analysts said on Thursday.

Yahoo's strength and eBay's weakness in Asia, and vice versa in Europe, meant the world's biggest Internet media company and the top Web auctioneer had much to gain from combining forces overseas.

Yahoo on Thursday said it will be the exclusive provider of online banners and other graphic advertising at eBay, and in return promote PayPal, eBay's popular online payment system.

"If they're going to do this in the U.S. they'll probably do it internationally as well," said Sasa Zorovic, an analyst at Oppenheimer & Co. "They would both benefit from leveraging one another's strengths."

Thursday's move stops short of an outright merger but eBay left room for the possibility of deeper ties.

"We will see," John Donahoe, president of eBay's marketplaces unit, told Reuters in an interview. "We think there is so much opportunity right in front of us. That's where our focus will be in the next six to 12 months."

With Google Inc. (GOOG.O) winning market share in the maturing Internet search business, there is a growing need for competitors to consolidate their operations.

Analysts said a key focus was China, where Yahoo, eBay, Google and Microsoft Corp.'s (MSFT.O) MSN have been vying for a slice of the world's second largest market with more than 100 million Web surfers.

While Yahoo has made strong inroads into Asia, partly due to local partnerships, eBay has had a tougher time.

Ebay arrived late into some Asian markets, such as Japan, where its brand recognition was low, analysts said. Europe, however, contributes 80 percent of eBay's international revenue and sales in the region grew 32 percent in the first quarter.

Source:- Tech News

Wish ebay use anyother payment processor than paypal. People in many Asian countries can't use ebay just because of damn paypal. Hoping that both Ebay and Yahoo will think of this too.

Khan, I think you`ll find that although PayPal is a very popular payment method, eBay isn`t restricting payments to PP only. Check their site out and you`ll see it mentions credit cards and cheques too. :wink:

Yeah Geoff, But the main problem is that I dont want to use my credit card online (After talking to many people , selling illegal credit cards , I am not willing to take risk) and sending checks (I hate to send checks). I love online payment processors because they are fast (secure then credit cards ).

Understand?????