Yahoo will buy a 10 percent stake in South Korea's No.2 online retailer, Gmarket, and thus not only gain a foothold in one of Asia's fastest-growing e-commerce markets but also confront eBay, which has long dominated the country's $11 billion online retail industry, reports Reuters. South Korea has one of the world's highest broadband penetration rates. Gmarket applied for a Nasdaq initial public offering worth up to $100 million early on Wednesday.

Despite the recent U.S. advertising and e-commerce alliance between Yahoo and eBay to battle Google, they are still competitors in Asia; eBay's South Korea business, Internet Auction, is the firm's fourth-largest market in the world and accounts for three-quarters of its Asia revenue.

Yahoo has agreed to buy the stake from U.S. venture capital firm Oak Investment Partners, the second-largest shareholder in Gmarket with 29 percent. South Korean internet portal operator Interpark, the third-biggest online retail player there, owns the biggest share with 33.74 percent.