Buffett could up Tesco stake if prices fall further

Warren Buffett has provided a much needed boost to Tesco by saying he is considering upping his stake in the supermarket giant.

He told CNBC that he was considering increasing his position in Tesco during a visit to the Fukushima prefecture in northern Japan.

He made the comments while being interviewed on prospects for investment in Europe, which he saw as offering attractive valuations in the equity, rather than the debt space.

Buffett singled out Tesco as his top pick. "If the price came down some on Tesco I'd buy some more of that," he told CNBC.

He added that European share prices "make a lot more sense than a year ago".

Buffett, who has held Tesco shares since 2007, bought another 34 million shares in Tesco for 371p per share in September upping his stake from 3.2% to 3.6%.

Tesco's UK sales have struggled recently as consumers cut back on their spending, and turned to discount chains such as Aldi or Lidl.

But he voiced concern over the future of the euro: "There is a major flaw in the euro system ... I do know the system as presently designed has a major flaw and that flaw won't be corrected just by words."

Buffett has turned to stocks and takeovers this year after interest rate declines have turned him off the bond market.

His most recent purchase has been a $10bn investment in IBM.

The investment veteran also told Bloomberg recently he was readying $10bn for his next acquisition.

"We like the A part better," Buffett said in an interview with Bloomberg News, referring to a preference for acquisitions over mergers.

"On the Lubrizol transaction I think we spent about $8.7bn. We'd love another one like that - we can handle that. We can manage somewhat larger. We can handle a $10bn deal very comfortably.

"It can be any place," he said. "If I can find something here in Japan that was a business that I like and understood, like their competitive position, like the price, like the financial position, like the management, we would do that tomorrow."

Buffett added he was unfazed by recent scandal at Japanese camera maker Olympus corp and had not been deterred from investment in Japan.

Olympus revealed this month it had concealed losses by paying inflated advisory fees.

Buffett made his biggest non-US acquisition in 2006 when his company Berkshire Hathaway paid $4bn for 80% of Israeli manufacturer company Iscar.