FRANKFURT (AFP) - The price of shares in Internet group Yahoo plunged here by 20 percent on Monday after software giant Microsoft dropped a friendly bid for the company.

Shares in Yahoo, the second biggest-Internet advertising platform, had lost 20.21 percent to 14.45 euros (22.35 dollars) in open-market trading, less than half the price offered by Microsoft.

Yahoo shares are not quoted in Germany but can be sold on several markets, including the one in Frankfurt, a spokeswoman for market operator Deutsche Boerse said.

Previous gains in the stock had been driven by Microsoft's takeover bid, trader Kai Wagner from Julius Baer/Kepler Research told AFP.

Now, the "market is purely reacting to the cancelled takeover bid," he said.

The share price were expected to fall roughly "back to the level where it was before the bid," Wagner said.

On January 31, the day before Microsoft announced its bid to buy Yahoo for 44.6 billion dollars, or 31 dollars a share, Yahoo's stock had closed at 19.18 dollars.

But on Saturday, Microsoft, the world's biggest software company, decided to walk away from a bid for Yahoo, after Yahoo refused an offer of 33 dollars per share that valued it at more than 47 billion dollars.

In New York, Yahoo's stock was trading at 22.27 dollars ahead of the open on Monday, down 22 percent from the closing price on Friday.

Citigroup analyst Mark Mahaney slashed his rating on Yahoo by two notches to sell from buy, and cut his stock price target to 26 dollars from 34 dollars.

Soleil Securities' Laura Martin downgraded Yahoo to sell from hold, saying she didn't believe Microsoft had pulled its bid to try to get a lower price later.