THE NEWS WRAP: Berkshire Hathaway takes $12 billion stake in IBM

Warren Buffett has discarded his long-held disdain for IT company stock by taking a $12 billion stake in tech giant IBM.

Buffett’s Berkshire Hathaway has purchased 64 million shares in IBM, or about 5.4% of the outstanding stock.

Buffett, who said he was “hit between the eyes” by the potential of the IBM stock, previously rejected the chance to invest in technology, saying: “The fact that there’ll be a lot of money made by somebody doesn’t bother me really. There’s going to be a lot of money made by somebody in cocoa beans. But I don’t know anything about ’em.”

Global recovery slowing, OECD warns

The Organisation for Economic Co-operation and Development has warned that the global economic recovery is slowing, with declines in all the world’s major economies.

The OECD said that the top seven economies in the world, or the “Group of Seven”, would grow by just 0.2% this year.

Business warning over cuts

Businesses have warned the Federal Government not to cut services too deeply as it seeks to return the budget to surplus next year.

“There is clearly a risk that, in the attempt to shoehorn the budget back into surplus in 2012-13, the government excessively tightens fiscal policy and slows the economy,” Australian Industry Group chief executive Heather Ridout told the Australian Financial Review.

Overnight

The Dow Jones Industrial Average fell by 87.75 points, or 0.7%, to 12,065.93. The Australian dollar dipped to 102.86 US cents.