NEW YORK (Reuters) - IBM (IBM.N: Quote, Profile, Research) said on Tuesday its board authorized a $15 billion share buyback program that could boost 2008 earnings by up to 5 cents a share, sending its stock up more than 4 percent.

The news also pushed the overall U.S. stock market higher. International Business Machines Corp, which has a market capitalization of roughly $150 billion, was by far the top driver of the Dow industrials index.

"IBM is showing its confidence it can still generate a lot of cash in a difficult environment," said American Technology Research analyst Shaw Wu. "We are in a bear market, we are literally on the brink of recession -- we actually might be in one already."

The new repurchase authorization comes after IBM reported strong fourth quarter results on January 17 and gave a 2008 outlook that topped Wall Street expectations as growth abroad made up for the weaker U.S. economy.

Shares of the world's largest computer services company have risen about 13 percent since the results, which underscored investor expectations that overseas services and software sales would help IBM through difficult times.

IBM said on Tuesday it now expects full-year earnings per share of at least $8.25, or 16 percent year-on-year growth, as a result of the buyback. In January, IBM had predicted 2008 earnings per share at $8.20 to $8.30.

The average Wall Street forecast was for 2008 profit of $8.22 per share, according to Reuters Estimates.

"IBM's profitable growth and consistently strong cash flow enable the company to continue to return value to our shareholders," Chief Executive Samuel Palmisano said in a statement.

IBM said it expects to spend up to $12 billion on stock repurchases in 2008, compared to $18.8 billion in 2007. It said it may buy shares in the open market or in private deals, and expects to use cash from operations for the buybacks.

The new $15 billion authorization program adds to about $400 million remaining at the end of February from a prior authorization, IBM said, adding that it did not expect to request board approval for more funds for buybacks in the next 12 months.

Shares of IBM were up 4.3 percent to $114.85 in early afternoon trading. The Dow Jones Industrial Average .DJI was up 1 percent, or about 125 points, while the S&P information technology index was 1.15 percent higher.

Shares of IBM rival Hewlett-Packard Co (HPQ.N: Quote, Profile, Research) rose 2.1 percent to $49.14. HP Chief Executive Mark Hurd told an investor conference on Tuesday that the computer and printer maker "feels good" about its earnings forecast, but declined to raise it.

(Reporting by Tiffany Wu in New York and Peter Henderson in Los Angeles, editing by Phil Berlowitz and Tim Dobbyn)

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