Speculation is rife on Wall Street that a big Internet deal or alliance is in the works, with Google, Yahoo, eBay or Microsoft as possible partners — and a Yahoo-eBay partnership seen as most likely.

A partnership or merger between eBay and Yahoo! is the most strategically feasible,” a report authored by analyst Imran Khan and the JP Morgan Internet team said on Monday.

A combined company would have the leading position in auctions, communications, payments, graphical advertising, audience reach, and geographic breadth,” the report said.

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