IBM is one of the technology industry's main bellwether stocks

Demand for its services outside the US helped to boost sales to $28.9bn (�14.7bn), topping expectations by more than a $1bn. Profits rose by 24%.

The firm's shares jumped the most in five years after the announcement that foreign sales had lifted earnings.

The news helped to ease fears over the extent technology firms would be hit by the slowing US economy.

IBM's shares finished the trading session 5.39% higher at $102.93, having climbed as much as 8.1% in earlier trading.

This is very positive for the likes of Intel and Microsoft and multi-nationals that get a large proportion of their revenue overseas Peter Misek, analyst, Canaccord Adams See IBM's shares

Sector boost

Peter Misek, an analyst at Canaccord Adams, said IBM's statement was good news for technology companies that have an international focus and are not reliant on the US for growth.

"Our view is this is very positive for the likes of Intel and Microsoft and any other large multinational that gets a large proportion of its revenue overseas," he said.

The results had been scheduled for release later in the week and the news took the market by surprise.

An IBM spokesman said that once it had become clear that the company's performance had been significantly better than expected in its fourth quarter, they felt it appropriate to tell investors as soon as possible.

"IBM is well-positioned as we begin 2008 as a result of our global business reach, solid recurring revenue stream and strong financial position, said Samuel Palmisano, IBM chairman and chief executive officer.

"We are on track to achieve our long-term earnings-per-share roadmap objective in 2010."

The upbeat assessment of the firm's prospects spurred gains across the technology sector, with Intel up 5.05% to $23.08, Hewlett Packard climbing 2.51% to $46.13 and Microsoft rising 1.39% at $34.39.