Boost For BankAm

Buffett-run Berkshire Hathaway announced plans to invest $5 billion in the Bank of America, a vote of confidence for the beleaguered financial firm.

The conglomerate has agreed to buy 50,000 preferred shares that will pay a 6 per cent annual dividend. The Bank of America has the option to buy back the shares at any time for a 5 per cent premium. According to CNBC, Buffett approached the Bank of America early Wednesday about a potential deal.

The investment by Berkshire should help allay market concerns about the bank. Shares of the financial firm have been battered of late over fears the company lacks sufficient capital. The stock has fallen nearly 30 per cent since the beginning of August.

"I remain confident that we have the capital and liquidity we need to run our business," Bank of America chief executive Brian Moynihan said. "At the same time, I also recognise that a large investment by Warren Buffett is a strong endorsement of our vision and our strategy."

Investors cheered the deal, sending shares of most big bank stocks higher on Thursday morning. While JP Morgan was up 4 per cent, Citigroup rose 7 per cent. Stocks of the Bank of America jumped 17 per cent.

The Berkshire investment comes at a pivotal time for the bank. Its troubled mortgage division has racked up billions of dollars in legal bills, and the financial firm faces investigation into its foreclosure practices. Last quarter, the Bank of America reported an $8.8 billion loss, owing in large part to a settlement with mortgage investors.

Moynihan has taken steps to cut costs and improve its capital cushion. He put the European credit card operation for sale and sold off the Canadian card division.

Last week, the bank announced plans to cut 3,500 jobs.

But the embattled chief stopped short of raising capital, reiterating that the financial firm was on solid footing. The assertions did little to soothe investors.

"Bank of America is a strong, well-led company, and I called Brian to tell him I wanted to invest in it," Buffett said in a statement.

Bargain-Hunting

Japan's Nikkei average ticked up on bargain-hunting on Friday and marked its first weekly gain in five weeks, with investors awaiting a speech from Federal Reserve Chairman Ben Bernanke for clues on what steps the U.S. central bank will take to support the economy.

Investors have also been latching onto stocks that have lost much ground this month. Auto stocks surged in the previous session and on Friday, Elpida Memory, the world's No.3 maker of dynamic random access memory chips, soared, also helped by a recovery in DRAM spot prices.

Selling from foreign investors -- which has helped to push down Nikkei more than 10 percent so far this month -- continued but some market players said their selling seems to be slowing.

"Last week, the market fell unless there were clear buying factors. This week that is no longer the case," said Soichiro Monji, chief strategist at Daiwa SB Investments, adding that he thought the market was oversold.

The benchmark Nikkei rose 0.3 percent to 8,797.78 for a weekly gain of 0.9 percent. It hit a five-month low of 8,619.21 earlier this week.

The broader Topix index gained 0.6 percent to 756.07.

"Some investors had increased cash positions earlier this month. Now they are putting back some of their money on stocks ahead of the end of month, though not in a big amount," said Masato Futoi, head of cash equity trading group.

Markets came into the week thinking Bernanke may announce a third round of asset purchases or some other extraordinary policy move later on Friday but these expectations have been dialed back somewhat.

Bernanke is scheduled to speak on Friday at 10 a.m. New York time (1400 GMT).

Tokyo shares' have tumbled this month on fears of a slowdown in the U.S. economy and European debt woes but the market has fallen far enough that valuations look very attractive.

"The index remains below 9,000, and this is the level where retail investors buy stocks with attractive valuations," said Hideyuki Okoshi, general manager at Chibagin Securities.

Shares listed on the Tokyo stock exchange's first section trade around book value, while shares on the S&P 500 are trading at 1.9 times their book value.

Elpida surged 17.6 percent to 535 yen after having slid more than 40 percent in the one month to Thursday's close, battered by the company's move to raise capital.

A trader at a foreign brokerage said that a number of factors were lifting the shares, including Wednesday's news about Abu Dhabi state-owned fund Aabar joining South Korea's STX Corp to bid for Hynix Semiconductor and a rise in chip spot prices.

Kyowa Hakko Kirin rose 3.3 percent to 785 yen after the company said it will buy back up to 4.4 percent of its own shares while KDDI Corp rose 2.8 percent to 557,000 yen on two brokerage upgrades to "outperform" from "neutral".

Volume was relatively high, with 1.9 billion shares changing hands on the Tokyo stock exchange's main board, higher than last week's average of 1.7 billion shares. Advancing shares outnumbered declining shares by 1,100 to 410.