Yahoo Inc. shares rose Tuesday after a report indicated billionaire investor Carl Icahn could start a proxy fight with the struggling Internet icon.

Yahoo's stock rose $1.30, or 5.2 percent, to close at $26.56. In the past year, the stock has traded between $18.58 and $34.08.

In a Tuesday report, CNBC cited people who have spoken with Icahn as saying that Icahn is considering launching a proxy fight.

Such a move is often made in an effort replace members of a company's board.

The report said Icahn declined to comment, and noted that the sources said he "began building a significant position in Yahoo" near the end of last week that may comprise as many as 50 million shares.

Such a move would come in the wake of Microsoft Corp.'s recent withdrawal of its unsolicited $47.5 billion takeover bid for Yahoo.

The CNBC report said Icahn has not been able to get confirmation that Microsoft will come back to negotiate if part or all of Yahoo's board is replaced, but that he may go forward with a proxy fight regardless.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.