Microsoft Corp, the world's largest software group, is still open to a partnership with search engine giant Yahoo Inc, Chief Executive Steve Ballmer said on Wednesday.

We remain open to a partnership with Yahoo, Ballmer told a seminar at the Cannes Lion 2009 advertising festival.

Asked if a deal could be sealed in the next year, he said: Who knows?

Ballmer did not give further details.

Microsoft offered to pay up to $47.5 billion for Yahoo early last year, but was rebuffed by Yahoo's former leadership.

There has been talk of a partnership between Microsoft and Yahoo in recent months, but no deal has emerged. Microsoft is also trying to challenge Google Inc with its own new search engine called Bing.

Ballmer also gave a cautious view over the prospects for the world economy, which has been hit by the financial crisis that arose from bank losses on home loans and complex debt instruments.

I don't think we're in a recession, said Ballmer.

I don't assume there is a recovery. I think we reset to a lower level and the world economy will grow again from this reset level.

Ballmer said he was not sure if a full recovery would occur in one year or in two years from now.

Asked whether he was worried about a pending European Union antitrust ruling about bundling browsers with operating systems, Ballmer replied: We comply with EU law.

(Reporting by Cyril Altmeyer; additional reporting by Dominique Vidalon; editing by Andre Grenon)

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