LONDON (AFX) - Leading shares are expected to open lower this morning with dealers expecting some profit taking following the recent M&A-generated gains and on news that US PC manufacturer Dell issued a slightly weaker than anticipated trading update, dealers said.

Spread bettor firm CMC Markets is tipping the FTSE 100 to open around 16 points lower at 5,301 having closed Monday at 5,317.3.

In London today the reporting season continues with several FTSE 100 stocks set to release interim results, notably Pearson, Imperial Tobacco, BAA and Friends Provident. Among second liners but of interest from a retail perspective, Matalan releases first half figures.

Later in the session attention is likely to turn to the US where the FOMC is scheduled to meet and a further rate hike of 25 basis points is anticipated as the Fed continues with its 'measured' interest rate policy.

Looking back at events on Wall Street last night, US stocks closed higher Monday, lifted by late-month portfolio additions and merger news, including a hostile 9.2 bln usd bid from Canada's Barrick Gold for Placer Dome.

But all three of the major averages closed lower for October, which was dominated at the outset by investor gloom linked to fears about inflation, interest rates and economic outlooks.

The Dow industrials rose 37.3 points to 10,440.07, after earlier rallying more than 80 clicks higher. The S&P 500 rose 8.6 points to 1,207.01 while the Nasdaq gained 30.42 points to 2,120.3.

In after hours trading shares of Dell fell almost 4 pct in brisk trading sparked by the company's lower outlook in an earnings update.

Dell stock fell to 30.70 usd at one point after the company said it sees third-quarter pro forma earnings at 39 cents a share, at the low end of its previous forecast.

In Asia Japans Nikkei closed up 261.36 points at 13,867.86, while in Hong Kong the Hang Seng ended the morning session up 145.27 points at 14,531.64.

Looking at the individual companies set to release interims today, UK publishing company Pearson is expected to give an upbeat third quarter trading update today, buoyed by a strong education market and a recovery in advertising revenues at the Financial Times newspaper.

Pearson expects Higher Education revenues to grow at about 4 pct in 2005, faster than the market rate but behind the 5-6 pct forecast by rival McGraw-Hill.

'Overall we expect Pearson to produce an encouraging third quarter update, with a possible upside surprise from increased guidance for Higher Education growth,' said brokerage Numis Securities in a preview note on the Pearson trading update.

Meanwhile, the loss-making Financial Times is expected to breakeven for 2005 if the rise in advertising revenues seen in the first half of the year continues.

Imperial Tobacco is set to release interims and UBS estimates that adjusted EPS will rise by 11 pct in the year, implying 12 pct EPS growth in the second half.

The broker added that the second half is expected to be driven by an improved performance from the Rest of Western Europe, lower start-up costs in the Rest of the World region and the impact of the share repurchase. It said the strong cash generation suggests total cash returns can continue to grow.

Airports operator BAA unveils first half figures today and shareholders are waiting to see the impact from the July bombings and the BA dispute.

UBS said that BAA results are somewhat useful in determining trends in retail spend and the development of the costs of the business, but they should not have a large bearing on the share price which should be determined by the value of the RAB and the cash flows rather than the earnings. The broker has a 'buy' rating on the stock.

In September BAA forecast passenger traffic growth of around 3 pct for the year to March and said its retail business had performed well.

Elsewhere Insurer Friends Provident is expected to turn in higher nine-month sales figures today, buoyed by steady growth in the UK, and a strong performance from its international division.

Analysts are forecasting group life and pension sales in the nine months to Sept 30 of 421.5-460.4 mln stg on an annual premium equivalent basis. The average forecast is 435.1 mln stg, compared with 323 mln stg in the same period last year.

The projected year-on-year increase partly reflects Friends' acquisition in late 2004 of Luxembourg-based life business Lombard International.

Friends, the UK's fourth-biggest listed insurer, is likely to be quizzed on the outlook for margins in the UK, amid evidence that stiff competition is putting pressure on prices.

Among FTSE 250 companies reporting, Matalan the struggling discount clothing and homewares retailer, is expected to reveal a 29 pct slump in first half pretax profit when it reports interim results today.

Analysts are forecasting a six months to Aug 27 consensus pretax profit of 30 mln stg under new IFRS accounting rules, down from a restated 42.5 mln stg in the same period last year. However, the interim dividend is expected to be maintained at 2.9 pence.

Matalan, which trades from around 180 UK stores, last updated the market on Aug 31 when it detailed a 6.4 pct fall in first half like-for-like sales, which strip out the impact of new and closed space. Total sales fell 1.8 pct.

ICAP is releasing first half 2006 results and UBS are forecasting 2006 interim profits of 96 mln stg, equivalent to 10.1 pence per share, up from 84 mln in the first half of 2005. Growth in the non-electronic business is anticipated to be 6 pct while UBS forecasts electronic profits to have grown from 9 mln stg to 18 mln.

On the economic front UK Nationwide House Prices for October is seen rising 0.40 pct versus a previous 0.20 pct fall in September. The UK CIPS Manufacturing Survey also for October is expected to rise to 51.8 from 51.5 last month.

Morning All,

Have you recovered from "Majestic" Monday yet.

ROLLS-ROYCE SAYS CURRENT TRADING IN LINE WITH GUIDANCE

Morning all.

Good Morning all

Good Morning all

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End-of-day Market Summary