NEW YORK (Reuters) - IBM's quarterly revenue missed Wall Street's expectations and a decline in services contract signings further damaged investors' confidence, sending its shares down three percent.

While firm growth in the company's higher-margin software unit and sales in emerging markets bolstered profit, the results were not as good as investors wanted to see from the world's biggest technology services company.

International Business Machines Corp said its second-quarter revenue rose two percent to $23.7 billion. Analysts on average had expected $24.2 billion, according to Thomson Reuters.

IBM blamed currency rates for reducing revenue by about $500 million in the quarter, but analysts said they were also concerned about some numbers, including signings of services deals, a key indicator of future revenue.

IBM said signed services contracts fell 12 percent to $12.3 billion. Total outsourcing services signings decreased 19 percent to $6.5 billion, it said.

"There were some currency hits that people were expecting, but even with that, it might have been a little bit weaker than people were expecting," said Mark Demos, portfolio manager at Fifth Third Asset Management, an IBM shareholder.