Microsoft buys stake in Facebook

Microsoft has paid $240m (£117m) for a 1.6% stake in Facebook that values the hugely popular social networking site at $15bn (£7.3bn).

Facebook spurned an offer from Microsoft's rival Google, which was also keen to invest the site.

Microsoft will also sell internet ads for Facebook outside the United States as part of the deal that took several weeks of negotiating.

Microsoft already provides banner advertising and links on the US site.

Mark Zuckerberg started the online social networking site in his Harvard University dorm room less than four years ago.

Mr Zuckerberg, 23, has indicated he would like to hold off on an initial public offering for at least two more years.

He rebuffed a $1bn takeover offer from Yahoo last year.