Volatility continued in the shares of Wells Fargo & Co. on Wednesday as the market fretted about the gloomy California economy and the plans of investor Warren Buffett.

Wells' stock surged $5.25, or 8.2%, on Monday and Tuesday amid speculation that Mr. Buffett, the legendary Omaha-based stock picker, would increase his stake in the San Francisco-based company.

But doubts set in about his timing, and the stock was off by as much as $1.25 on Wednesday. In late trading, it had rebounded a little to $69.75, off 50 cents. Trading was active at about one million shares.

Stake Can Rise to 22%

Mr. Buffett has permission to acquire up to 22% of the shares outstanding. Earlier this month he disclosed that he had raised his stake in Wells to 11.85% from 10.81%.

According to market rumors on Wednesday, the investor was in the midst of increasing his stake to 20%.

A spokeswoman for Berkshire Hathaway Inc., Mr. Buffett's company, said, "We never comment either about our holdings or on rumors about our holdings." Wells Fargo also declined to comment.

Wells' stock, always among the most actively traded bank issues, has been the particular focus of attention lately because of its considerable exposure to California's recessionary economy and real estate market.

The bank posted disappointing third-quarter earnings after a larger than expected $400 million loan-loss provision.

Earnings Estimate Cut

That prompted analyst Raphael Soifer of Brown Brothers Harriman & Co. to cut his 1992 earnings estimate to $5 a share from $6 and his 1993 estimate to $7 from $8. The analyst said on Wednesday that he expects Wells to continue needing higher loss provisions and to avoid expansion for the time being.

Wells was also rated by UBS Securities Inc. among the four major banks that will likely benefit least if Gov. Bill Clinton of Arkansas, the Democratic nominee for President, is elected.

Among other things, UBS analysts Brent B. Erensel and Michael L. Mayo think its important credit card business will be hurt, dampening earnings.

The analysts believe a Clinton administration would spotlight consumer interest rates, including card rates, as being higher than many other rates currently.

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