Finance topics

A French official says France may propose joint bonds among the eurozone’s strongest economies as part of a package of measures to save the shared currency, despite German resistance.

The official said Tuesday that discussions over joint bonds by top-rated triple A eurozone economies is under discussion as the French government prepares for an EU summit next week.

Proponents say the proceeds of the so-called elite bonds could be used to help the eurozone’s weaker countries deal with their debts, in return for strict conditions being imposed on their budgets.

The official spoke on condition of anonymity because the sensitive, closed-door talks are still under way.

German Finance Minister Wolfgang Schaeuble dismissed reports of joint bonds Monday, saying they were “completely made up.”

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Asian stocks climbed Monday, buoyed by a robust start to the U.S. holiday shopping season and reports that European leaders are considering legal means to force debt-ridden euro countries into fiscal discipline.

Japan’s Nikkei 225 index jumped 1.9 percent to 8,314.45. South Korea’s Kospi gained 2 percent to 1,811.99 and Hong Kong’s Hang Seng index rose 1.8 percent to 18,012.29. Australia’s S&P/ASX 200 added 2 percent to 4,067.

Benchmarks in mainland China, Singapore, Indonesia and Taiwan were also higher.

German media reported over the weekend that German Chancellor Angela Merkel and French President Nicolas Sarkozy were studying legal changes _ possibly amendments to the European Union growth and stability pact _ to force nations using the euro common currency to comply with strict rules for budget discipline and tough sanctions for violators.

Traders were awaiting more details on such a possible plan, as well as the results of a key meeting Tuesday of finance ministers from the 17 euro nations.

Worries about Europe’s debt crisis flared anew Friday after Italy had to pay 7.8 percent to borrow for two years at a debt auction. It’s another sign that investors are increasingly hesitant to lend to European countries.

Higher interest rates on government debt of Italy, Spain and other European countries have rattled stock markets in recent weeks. Greece, Ireland and Portugal had to seek financial lifelines when their interest rates crossed the 7 percent mark.

Meanwhile, a record 226 million shoppers visited stores and websites during the four-day U.S. holiday weekend starting on Thanksgiving Day, up from 212 million last year, according to early estimates by The National Retail Federation.

The results for the first holiday shopping weekend show that retailers’ efforts to lure shoppers during the weak economy are working. The question remains whether retailers’ will be able to hold shopper attention throughout the remainder of the season, which can account for 25 to 40 percent of a merchant’s annual revenue.

During a shortened post-holiday trading session on Friday, the Dow Jones industrial average fell 0.2 percent to close at 11,231.78. The S&P 500 lost 0.3 percent to 1,158.67. The Nasdaq composite dropped 0.8 percent to close at 2,441.51.

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India is opening its $400 billion retail industry to global chains such as Wal-Mart in a move that could improve decrepit infrastructure that causes massive food waste in a country plagued by malnutrition and high inflation.

Top retailers have lobbied for years for a chance to build stores in the nation of 1.2 billion people and political deadlock on long-promised reforms in retail and other areas has helped cool foreign investor interest in India. Foreign retailers have Indian partners in wholesale operations, but no retail stores.

“Multibrand” stores such as supermarkets could be built with up to 51 percent foreign ownership under the change the Cabinet approved Thursday. The Cabinet also allowed 100 percent foreign ownership of single-brand retail operations, up from 51 percent.

Advocates see the move as a way to strengthen India’s creaking food distribution system.

The country suffers chronically high malnutrition and soaring inflation, but it’s not for lack of food. It is the world’s second largest grower of fresh produce, yet loses an estimated 40 percent of its fruit and vegetables to rot because of a lack of refrigerated trucking and warehouses, poor roads, inclement weather and corruption. That translates into lower incomes for farmers and higher prices for consumers.

If companies such as Wal-Mart and Tesco can open shops of their own, they may invest billions in improving farming techniques and getting produce into stores more efficiently, bringing down food inflation _ which has averaged 10.5 percent over the last year _ and possibly improving rural incomes.

Wal-Mart, British-based Tesco PLC and French-based retailer Carrefour welcomed the decision.

“This legal evolution should contribute to modernize the Indian food supply chain and to fight against food inflation for the benefit of Indian customers,” Carrefour said in a statement. It said the decision would help India’s farmers and the nation’s general economic development.

Opposition parties and some allies of the government resisted the move. The country has struggled to find consensus because of concerns that competition from the foreign retail giants could hurt millions of small shopkeepers, as well as the poor best payday advance.

Speaking on the NDTV news channel, ruling Congress party spokesman Abhishek Manu Singhvi called the decision “centrist and reasonable.”

The main opposition, the right-wing Bharatiya Janata Party, decried the move.

“The government has clearly bowed to international pressure,” spokesman Chandan Mitra told the same TV channel.

India’s $400 billion retail sector is the nation’s second-largest employer, after agriculture, according to consulting firm Deloitte.

The Ministry of Commerce says it will cost 76.9 billion rupees ($1.7 billion US) to build the additional 35 million metric tons of food storage India needs. In a July paper, it suggested that loosening restrictions on foreign investment in India’s retail sector could be the best way to get more storage space built.

Ashish Sanyal, managing director of retailing consultancy AMP Retail Services, said small businesses had nothing to fear from the big chains.

“At the end of the day this is like the high tide. All boats will rise. We will learn from the big retailers.”

Long delays in economic reforms in India have made investors increasingly wary of plowing money into the country.

India’s policymakers are now under acute pressure to find ways to attract foreign currency to help strengthen the rupee, which hit an all-time low against the dollar this week.

Traders say the central bank has been buying rupees in recent days but those measures are unlikely to reverse the currency’s plunge absent more farsighted policy reform.

The discussions on opening up India’s retail sector have been going on for 10 years.

“There is a limit to how much time we can spend on a decision,” said Singhvi, the Congress spokesman.

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President Ali Abdullah Saleh’s agreement to step down failed to halt anti-government demonstrations or prevent violence Thursday as regime supporters killed five protesters demanding that the ousted leader be put on trial for crimes ranging from corruption to bloodshed during the current uprising.

Saleh signed the U.S.-backed power-transfer deal, brokered by neighboring countries, Wednesday in the Saudi capital Riyadh in exchange for immunity from prosecution. It sets in motion a number of changes designed to stop the uprising that has battered Yemen’s economy and caused a nationwide security lapse that al-Qaida linked militants have exploited to step up operations.

Saleh passed his presidential duties to his vice president Abed Rabbo Mansour Hadi, effectively ending his 33-year rule. If the deal holds, he’ll be the fourth leader to lose power in the wave of Arab Spring uprisings this year, following longtime dictators in Tunisia, Egypt and Libya.

In the coming days, the opposition is supposed to name a prime minister, who will be sworn in by Hadi. The prime minister will then form a national unity government, evenly divided between the opposition and the ruling party. Hadi also is to announce a date for presidential elections, to be held within 90 days.

Observers note that the deal does not include a number of Yemen’s biggest power brokers, including Saleh’s relatives who head elite security forces, powerful tribal chiefs and military commanders who have joined the protesters.

Many of the protesters, who have camped out in public square for months to call for sweeping democratic reforms, rejected the deal immediately, saying the opposition parties that agreed to it were compromised by their long association with Saleh.

Thousands took to the streets again Thursday in the capital Sanaa, the central city of Taiz and elsewhere, protesting the deal and calling for Saleh to be tried for charges of corruption and for the killing of protesters during the uprising.

They chanted “No immunity for the killer” and vowed to continue their protests.

Security forces and government supporters opened fire on Sanaa’s main protest camp Thursday, killing five protesters with live ammunition, said Gameela Abdullah, a medic at the local field hospital.

A video posted online by activists showed men in long robes and Arab head scarves firing assault rifles at protesters, who scramble for cover. Some throw rocks and carrying large pictures of Saleh payday advance low fees.

“We’ll keep fighting until Saleh is tried for all the crimes he has committed against the people in his capacity as the head of the armed forces,” said activist Bushra al-Maqtari in Taiz, which has seen some of the most violent crackdowns on anti-regime protesters. Hundreds of demonstrators have been killed nationwide since January.

Abdullah Obal, a leader in the coalition that signed the deal, said the opposition intended to meet with protest leaders to address their demands.

“The agreement does not cancel the youth’s demands or go against them,” he said. “It is their right to protest.”

Some doubt that the deal marks the end of political life for Saleh, who has proved to be a wily politician and suggested in remarks after the signing ceremony that he could play a future political role in the country, along with his ruling party. He had agreed to sign the deal three times before, only to back away at the last minute.

Saleh had stubbornly clung to power despite nearly 10 months of huge street protests in which hundreds of people were killed by his security forces. At one point, Saleh’s palace mosque was bombed and he was treated in Saudi Arabia for severe burns.

“The signature is not what is important,” Saleh said after signing the agreement. “What is important is good intentions and dedication to serious, loyal work at true participation to rebuild what has been destroyed by the crisis during the last 10 months.”

International leaders who had long pushed for the deal applauded Saleh’s signature, many hoping it would help end a security breakdown that has allowed Yemen’s active al-Qaida branch to step up operations in the country’s weakly governed provinces.

President Barack Obama welcomed the decision, saying the U.S. would stand by the Yemeni people “as they embark on this historic transition.”

King Abdullah also praised Saleh, telling Yemenis the plan would “open a new page in your history” and lead to greater freedom and prosperity.

Italy’s foreign minister, Giulio Terzi, lauded the agreement and called for an end to violence.

“Now it is necessary that the accord is fully implemented and that all violence cease,” he said.

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A coalition of retail groups sued the Federal Reserve on Tuesday, claiming the regulator ignored the law by setting too high a cap on the fees that banks can charge merchants for handling debit card purchases.

The National Retail Federation and other groups claimed in U.S. District Court in Washington that the Fed buckled under pressure from bank lobbyists when it set the cap at an average of about 24 cents per transaction in late June. The previously unregulated fees used to average around 44 cents.

The cap, which took effect Oct. 1, was initially proposed at 12 cents.

American Bankers Association CEO Frank Keating accused retailers of ’seeking more profits from government price controls” by filing the suit, and maintained that retailers have not passed on the savings that resulted from the cap to their customers.

The merchant groups, which included National Association of Convenience Stores and the Food Marketing Institute, said that in raising the cap, the Fed considered expenses that the law did not allow.

Their lawsuit maintains that the board dropped its earlier view that the only costs that should be considered in the fee were those involving the authorization, clearing and settlement of a transaction. Instead, the retailers claim, the Fed added costs, such as fraud losses, associated with a bank’s debit card operations that were not included in the law faxless payday loans.

The suit maintains the cap is an “unreasonable interpretation” that exceeds the authority delegated to the Fed under the law. And it complains the Fed wrongly interpreted another provision of the law that requires merchants have a choice of which network handles their transaction.

The law, commonly known as the Durbin Amendment for Sen. Dick Durbin, D-Ill., who championed it, is part of the financial regulatory reform passed in July 2010.

Banks lobbied hard against the fee cap. They maintain it will cost them about $7 billion in annual revenue.

Attempts to compensate for the loss to this and other regulations by charging customers monthly fees for using debit cards sparked a nationwide furor in recent months, leading the banks to drop their plans.

Minnesota-based TCF Bank dropped an earlier lawsuit challenging the legality of the Durbin Amendment a day after the Fed set the cap above its original proposal.

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Gilead Sciences says it will spend $11 billion to buy drug developer Pharmasset at a price more than 88 percent over the stock’s latest closing price in a bet on its experimental hepatitis C treatments.

Gilead says it will pay $137 per share in cash for each Pharmasset share. That stock closed at $72.67 on Friday.

Pharmasset said earlier this month it had started late-stage clinical trials of an experimental hepatitis C drug. It also plans two other late-stage trials in 2012.

Hepatitis C is a viral infection that often has no symptoms but which can lead to life-threatening liver damage.

Gilead will pay for the deal with cash on hand, bank debt and senior unsecured notes. It expects the acquisition to close in next year’s first quarter.

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Tens of thousands of Egyptians rallied Friday in Cairo’s Tahrir square with Islamists in the forefront to protest against what they say are attempts by the country’s military rulers to designate themselves as the guardians of a new Egypt. It was one of the largest rallies in Egypt in recent months.

Most rallies in Tahrir have been led by liberal- or left-leaning groups. But Friday’s rally was dominated by the country’s most organized political group, the Muslim Brotherhood, which has rarely come out in full force since the protests that forced President Hosni Mubarak to step down in February.

The Brotherhood had until recently avoided confrontation with the ruling Supreme Council of the Armed Forces, but now warns of escalating its protest campaign if plans to give permanent political powers to the military are not scrapped.

“The army has no role in ruling people. Its only job is to protect the country. We want civilian rule chosen through democracy,” said Hani Hegazi, a 28-year old Brotherhood member who traveled by bus to Tahrir from the Delta province of el-Beheira.

Banners read: “Down with military rule. Egypt our country is not a military camp.” Some demonstrators flew the Egyptian flag, while others including ultraconservative Salafis waved a banner declaring Islam’s holy book, the Quran, to be “our constitution.”

The rally was called to protest a document floated by the government which declares the military the guardian of “constitutional legitimacy,” suggesting the armed forces could have the final word on major policies even after a new president is elected. The document, which includes guiding principles for Egypt’s new constitution, also introduces clauses that would shield it from civilian oversight.

Most of Egypt’s pro-democracy groups object to the document, calling it an attempt to perpetuate military rule past the post-Mubarak transitional period which is supposed to end with the election of a new parliament and a new president.

In addition to the Brotherhood, Salafis, left- and liberal-leaning groups such as the April 6 movement and other youth revolutionary alliances joined the rally, demanding a timetable for the end of military rule, which began in February.

They have called for marches from mosques around Egypt to major squares, dubbing it the “Friday of the Single Demand” _ that demand being a clear date for the transfer of power to civilian rule. Many groups have planned to hold an open ended sit-in until a date has been set.

The Brotherhood says the document reinforces “dictatorship.”

“It contains articles that rob the people of their sovereignty and reinforces dictatorship. It constitutes a coup against the principles and goals of the January 25 revolution,” the group said in a statement issued Wednesday. Last-minute negotiations between the government and the Brotherhood failed to stave off their participation in the rally, or scrap the document payday loans lenders.

The show of force comes 10 days before the country’s first parliamentary elections since Mubarak stepped down, when a Brotherhood-affiliated political party is expected to fare well.

Anger against the Supreme Council has been building up over their management of the transition period. Many complain that the generals are recreating the Mubarak regime by cracking down on opponents, by refusing to order a thorough reform of the security services, and by monopolizing decision making. Islamists and liberals alike now express fear that the military council wants to hold on to power, a claim denied by the generals.

The military council had promised to transfer power to an elected civilian government within six months of Mubarak’s ouster. But according to a vague timetable in place, it may not be until early 2013 that a president is elected. Only the dates for the parliamentary elections, which are due to begin in ten days and which will drag into March, are yet known.

Walid Farouk, 32, who wore the heavy beard and traditional robe of the ultraconservative Salafi trend, said that Egypt had seen nothing good from military rule since the army first took power in 1952.

“All of us are scared that the army could try to hold on to power,” he said. “It is time for a civilian government.”

The writing of Egypt’s constitution has been a divisive issue, and details of who will write it and what it contains are at the heart of recent rallies.

Some liberals have supported the idea of writing guiding principles for the constitution, fearing that a parliament controlled by Islamists would insert religious principles into the document.

Even now, some liberals remain opposed to the Friday rally, saying a document is necessary to detail how members of the assembly are to be chosen, and controversial clauses can be negotiated.

But many others have come to distrust the military’s Supreme Council at least as much they distrust the Islamists.

At Friday’s rally, protesters are also expected to celebrate the birthday of one of the most prominent revolutionary to be jailed by the military prosecutor. Alaa Abdel-Fattah, a famous blogger and activist, was detained late last months for refusing to answer to the military prosecution on his alleged role in sectarian violence that left 27, mostly Christians, dead. He turned 30 on Friday.

Many hold the military responsible for the violence, and see Abdel-Fattah’s detention as an attempt to find a scapegoat and discredit activists.

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Just as the U.S. economy is making progress despite Europe’s turmoil, here come two new threats.

Deep spending cuts are set to kick in if a congressional panel can’t agree by Thanksgiving on how to shrink the budget deficit. And Congress may let emergency unemployment aid and a Social Security tax cut expire at year’s end. Either outcome could slow growth and spook markets.

Analysts are concerned. Yet most aren’t panicking.

Many say the economy and markets can withstand the blows. That’s because Congress or the Federal Reserve could take other steps next year to blunt the automatic cuts and lift the economy. And investors expect so little from the congressional panel that they’re unlikely to overreact if no deal is reached.

“There’s no doomsday scenario in reducing government spending,” said David Kelly of JP Morgan Funds.

The 12-member bipartisan panel, or supercommittee, was created in August to defuse a political standoff over raising the federal borrowing limit. It’s supposed to find at least $1.2 trillion in deficit cuts by Nov. 23. If it fails, federal spending would automatically be cut by that amount over nine years, starting in 2013.

The law triggers cuts in programs prized by both parties: social services such as Medicare for Democrats, defense spending for Republicans.

The panel appears to be deadlocked.

Economists say a stalemate makes it harder for Congress to extend the Social Security tax cut and unemployment benefits. On the other hand, if the supercommittee does forge a deal, it might include an extension of those benefits. Or it could at least clear the way for an extension later.

The Social Security tax cut gave most Americans an extra $1,000 to $2,000 this year. Unemployment benefits provide about $300 a week. Most of that money quickly and directly boosts consumer spending, which drives the economy.

By contrast, an expiration of those benefits could cut growth by about three-quarters of a percentage point, economists say. Throw in other cuts, like those passed in the August debt deal, and all told, federal budget policies could subtract 1.7 percentage points from growth in 2012, according to JPMorgan Chase and Moody’s Analytics.

Given the tepid economy, such a hit could be damaging.

“It would be very difficult for an economy that’s doing well to digest, let alone one that’s barely growing at potential,” said Ryan Sweet, an economist at Moody’s. “That could unwind a lot of the improvement we’ve seen so far.”

The economy grew at an annual rate of 2.5 percent in the July-September quarter. Some analysts fear it could fall below 2 percent next year, especially if the emergency unemployment benefits and Social Security tax cuts aren’t renewed.

The U.S. economy faces other threats, too _ from persistently high unemployment to Europe’s spreading debt crisis, which could hasten a recession.

If the automatic spending cuts take effect, the defense budget could be cut by nearly $500 billion over nine years. Some contractors are nervous.

Wes Bush, CEO of Northrop Grumman, has told analysts that the company is bracing for spending cuts.

“It’s certainly going to be a more challenging environment” next year, he said.

Another wild card: Some investors fear that the supercommittee’s failure would spark fresh downgrades of U.S. debt. Standard & Poor’s downgraded the government’s long-term debt in August. That contributed to a stock market plunge. It’s possible that a deadlocked supercommittee would lead the two other major rating agencies _ Fitch and Moody’s _ to follow suit.

Yet S&P’s downgrade did little to tarnish U.S. debt. Treasury prices rose, and yields fell. Bond investors still saw Treasurys as a super-safe investment. Federal borrowing costs actually declined.

“S&P showed that when a rating agency downgrades the best-known security in the world, it has little impact,” Kelly said. The market for U.S. Treasurys is so broad, accessible and transparent that ratings downgrades don’t pose much threat, he noted.

Kelly said Wall Street is unlikely to panic given that expectations for the supercommittee “are so low as to be subterranean.”

Even so, some traders appear to be positioning for a shock. So-called “defensive” sectors of the stock market, like healthcare companies and utilities, which tend to retain their value in a weak economy, have been outpacing the S&P 500 index as a whole.

In the past month, the economy has shown surprising strength. Reports this week showed that manufacturers are producing more goods and consumers are spending more. The number of people seeking unemployment benefits for the first time is at a seven-month low.

Still, more than once since the recession officially ended more than two years ago, the economy has displayed vigor only to stumble again. High gas and food prices and Japan’s earthquake sharply slowed growth in the first half of the year. Congress’ debt-ceiling fight sent consumer confidence to recession levels.

Sweet thinks there’s a good chance Congress will end up extending the Social Security tax cut. Partly on that assumption, Moody’s foresees 2.6 percent growth next year. For this year, analysts generally estimate less than 2 percent growth.

Lawmakers could make other policy changes next year to energize the economy. The tax cuts enacted during the Bush administration, and extended in 2010, are set to expire after 2012. Republicans will push to renew them.

Some of the automatic cuts set to kick in in 2013 could be delayed or altered. That’s particularly true if the White House or either chamber of Congress changes sides in 2012.

And some economists say the automatic spending cuts could actually boost confidence a bit: They would reassure the world that the U.S. government can make progress in shrinking its deficit.

Even so, the supercommittee seems likely to fall short of its goal to help reduce the federal debt load.

And there’s more pressure to come.

Priya Misra, an analyst at Bank of America Merrill Lynch, estimates that Congress will need to find $2 trillion more in cuts by August 2013 to prevent another credit downgrade.

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Shares of Abercrombie & Fitch Co. tumbled on Wednesday after the retailer of preppy teen apparel reported third-quarter results that missed expectations due to higher costs and a slowdown in Europe.

After losing market share to cheaper competitors during the recession, Abercrombie & Fitch has focused on expanding internationally with flashy flagship stores in places like Milan and Paris and on closing underperforming stores in the U.S.

But it is facing challenges on two fronts, higher costs and the increasingly shaky economy in Europe. In a call with analysts, CEO Mike Jefferies said the company stood by its European expansion plans.

“Our European business, while slowing somewhat during the quarter, is very robust and healthy by any objective measure,” he said. “If anyone is inclined to believe that a softening of our business in Europe this quarter in the face of severe macroeconomic headwinds is a major issue for our model, frankly, I think they are missing the forest for the trees.”

Its shares dropped more than 14 percent in late morning trading.

Abercrombie reiterated that it plans to open 40 international mall-based Hollister stores during the year. About 25 have opened as of Oct. 29. It plans to open five international flagship Abercrombie & Fitch stores in 2011. It said it would open Abercrombie & Fitch flagship stores in Amsterdam and Munich in 2012, in addition to previously announced flagships opening in Hamburg and Hong Kong.

Meanwhile, high costs pressured results. The cost of goods sold was up 34 percent during the quarter. But the company did not raise prices, in order to drive sales in its U.S. stores.

“We chose to keep our average unit retail prices down in these stores, which, combined with double-digit average unit cost increases, puts significant pressure on our gross margins,” Jeffries said.

He said the company likely would likely raise prices in the future, and not doing so “left dollars on the table,” in the third quarter.

The New Albany, Ohio-based retailer’s net income rose to $50.9 million, or 57 cents per share, for the three months ended Oct. 30. That compares with $50 million, or 56 cents per share, a year ago. Analysts polled by FactSet expected earnings of 72 cents per share.

Revenue rose nearly 22 percent to $1.08 billion from $886 million. Analysts expected revenue of $1.07 billion.

U.S. revenue rose 14 percent to $920.2 million. International sales rose 56 percent to $255.7 million.

Revenue in stores open at least one year, a key gauge of a retailer’s performance, rose 7 percent, including a 4 percent gain at Abercrombie & Fitch, a 6 percent gain at Abercrombie kids stores and an 8 percent gain at surf-themed Hollister Co.

Shares fell $8.01, or 14.4 percent, to $47.69 in late morning trading after falling as low as $46.69 earlier in the session. The stock had been down 3 percent since the beginning of the year.

Stock fell in the broader market as oil topped $100 a barrel for the first time since July and concern about Europe’s debt crisis lingered. The Dow fell 121 points in morning trading.

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Warren Buffett said Monday that his company has spent $10.7 billion to buy more than 5 percent of IBM’s stock this year, a surprising move by the billionaire investor who has long shied away from investing in high technology companies.

Berkshire Hathaway also revealed several other new investments made during the turmoil of the third quarter. Besides the new IBM investment, Berkshire added much smaller stakes in Intel Corp., DirecTV, General Dynamics Corp. and CVS Caremark Corp.

Most of the details emerged from the quarterly update Berkshire filed with regulators on its $59 billion U.S. stock portfolio. Buffett disclosed some details in interviews earlier in the day.

Monday’s filing doesn’t offer a full picture of Berkshire’s holdings, however, because the Securities and Exchange Commission allowed the Omaha-based company to keep some of its investments confidential.

Buffett has long refused to invest in high-tech companies because he has said it’s too difficult to predict which technology businesses will prosper in the long run.

But he said he recently realized his view of IBM was wrong based on what he read in the company’s annual reports and what he learned by talking to information-technology departments at Berkshire subsidiaries. He said he should have realized years sooner that hardware is no longer the heart of IBM’s business.

“Now they’re very much a services company, and they’re very intertwined with their customers,” Buffett said. And he said IBM’s customers are reluctant to change once they start working with IBM.

So Berkshire has bought about 64 million shares since March, or about 5.5 percent of IBM. Buffett says he believes IBM has a sound plan for the future.

Andy Kilpatrick, the stockbroker-author of “Of Permanent Value, the Story of Warren Buffett,” said it’s surprising to see Buffett invest in a high-tech company, but the investment appears to be an example of Buffett spotting something in plain sight that he had previously overlooked.

“I don’t think it moves things very far from what he’s always done,” Kilpatrick said.

IBM joins several other American business icons in Berkshire’s stock portfolio. Buffett’s company already holds stakes in Coca-Cola Co., American Express Co., Wells Fargo & Co., among others.

IBM officials declined to comment Monday on Buffett’s investment.

International Business Machines Corp., which marked its 100-year anniversary in June, has proven resilient even in a downturn because of hard decisions it made in the 1990s, when it tapped an outsider as CEO to help with a turnaround.

At the time, IBM was slipping with the rise of cheap microprocessors and rapid changes in the industry. Although it helped make the personal computer a mainstream product, it quickly found itself outmatched in a market it helped create. PCs also began to perform many of the functions of mainframes computer, throwing IBM’s main moneymaking business into disarray.

The company decided then to focus on the high-margin areas of software and technology services and move away from computer hardware. That intensified with IBM’s $3.5 billion purchase of PricewaterhouseCoopers’ consulting business in 2002 and the sale of its PC business to Lenovo for $1.75 billion in 2005. Today, IBM is the world’s biggest technology services provider no fax pay day loan.

The shift is important because it has allowed IBM to ride two recessions. When times are tough, businesses pay IBM to help them find ways to cut costs and handle technology chores that would be more expensive to perform in-house.

IBM’s stock has more than doubled since the depth of the recession in 2008. IBM shares gained as much as $2.46 Monday to trade near its 52-week high of $190.53 before slipping to close at $187.35, down 3 cents.

Buffett said Berkshire paid an average of about $170 per share for the IBM stock.

IBM executives insist the company’s focus on long-term contracts insulates it from economic swings. The company has said it is ahead of its own aggressive forecasts. IBM has disclosed a goal of hitting $20 per share in adjusted earnings by 2015, a rare example of a long-term earnings target made public by a major company. IBM, which is based in Armonk, N.Y., says it plans to continue growing its software business and invest about $20 billion in acquisitions from 2011 to 2015.

The third-quarter report filed Monday doesn’t include all of Berkshire’s new IBM stake because Buffett said some of the shares were bought in the fourth quarter.

A couple of the other new investments revealed Monday are tech companies. At the end of September, Berkshire held 9.3 million Intel shares, 4.2 million DirecTV shares, 3.1 million General Dynamics shares and 5.7 million CVS Caremark shares.

But those other new investments, besides IBM, were worth less than $200 million at the end of September. That dollar figure suggests those investments were made by Berkshire’s new investment manager Todd Combs, who manages between $1 billion and $3 billion.

It’s not clear who picked the investments because the filing doesn’t differentiate between investments Berkshire makes, investments any of roughly 80 subsidiaries make, or investments made by Buffett himself.

Besides the new investments, Berkshire also reported changes in some of its other holdings, including:

_ Increasing its sizeable stake in Wells Fargo to 361.4 million shares from 352.3 million in June.

_ Reducing its holdings of Kraft Foods to 89.7 million shares from 99.5 million.

_ Boosting its Dollar General stake to 4.5 million shares from 1.5 million.

_ Increasing its stake in insurer Torchmark Corp. to 4.2 million shares from 2.8 million.

Berkshire’s investments are closely watched in the market because of Buffett’s successful record. Buffett has said that Berkshire has been buying aggressively during the recent market turmoil.

Berkshire occasionally receives permission from the SEC to delay disclosing some stock purchases to prevent others from driving up the price of those stocks before Berkshire completes its purchases. Berkshire then discloses the purchases or sales in a subsequent quarter and issues amended reports for previous quarters.

The SEC says it grants such confidentiality to investment managers only when they can show they would be harmed substantially by immediate disclosure.

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