Veteran US investor Warren Buffett's company Berkshire Hathaway is to buy $5 billion worth of preferred stock in Goldman Sachs, with an option to buy another $5 billion over the next five years. Goldman has also announced plans to raise an additional $2.5 billion by selling stock in a public offering.

Given Mr Buffett’s legendary shrewdness, the move is seen as a big vote of confidence in Goldman and allowed some investors to hope that the financial sector may at last be ready to begin rebuilding.
 
Mr Buffett said: "Goldman Sachs is an exceptional institution. It has an unrivalled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance."

Goldman shares are down  over 40 per cent since the start of 2008 and almost 20 per cent in the last week. On the news of Mr Buffett's buying at $115 they rose more than 8 per cent to $136.50.