Morgan Stanley’s results due later in the day will also provide further clarity on the strength of U.S. investment banks amid a global credit crisis.

In the UK, Land Securities , 3i Group and Severn Trent will go ex-dividend this session and together are expected to take 0.9 points off the index.

Meanwhile, the Guardian said hedge funds would lobby the Financial Services Authority later in the day to delay its new rules for disclosing trading positions during rights issues.

* U.S. stocks drop on bank warning, flood-hit firms

* Japan’s Nikkei up 0.4 pct, battery makers higher

* GLOBAL MARKETS-Asian stocks up as oil dips

* Dollar steadies after dipping on Fed rate views

* Oil extends fall, more convinced on Saudi output

* Treasuries sit tight in Asia

* Gold dips on oil, palladium near 2-month high

UK stocks to watch on Wednesday are:

BARCLAYS Singapore’s Temasek Holdings and the Qatar Investment Authority are among the sovereign wealth funds considering backing a share issue by Barclays as the bank seeks to raise more than 4 billion pounds from investors, the Financial Times said.

BP The Russian co-owners of oil firm TNK-BP, half owned by BP, said on Tuesday they had rejected an offer from the major to buy their stakes and accused BP of trying to seize control of the venture.

LLOYDS TSB Lloyds TSB would face tough shareholder opposition if it decided to bid for Deutsche Postbank or another German lender, The Independent newspaper reported.

ROYAL DUTCH SHELL A union representing tanker drivers reached a pay deal with employers on Tuesday and cancelled a threatened strike at Shell petrol stations in Britain, union officials said.

ROYAL BANK OF SCOTLAND Royal Bank of Scotland has drawn up a list of potential candidates to join its board, which includes former Barclays executive Naguib Kheraj, the Guardian said.

INFORMA , UNITED BUSINESS MEDIA United Business Media said on Tuesday that talks with Informa about a possible all-share merger have ended, but its UK rival said it had received a fresh approach.

The Times said a private equity consortium led by Providence Equity was behind the latest bid approach to Informa.

RIO TINTO The miner has approved a $667 million investment in its Pilbara mining region in Australia, under a previously announced plan to boost iron ore output there to 320 million tonnes a year by 2012.

TESCO , UNILEVER , NORTHERN FOODS Biggest food and drink companies serving UK market, including Tesco, Unilever and Northern Foods, have clubbed together to share transport in move forecast to take 800 lorries off the roads each year, the Daily Telegraph said.

J. SAINSBURY The surpermarket group is due to issue its trading update.

3I GROUP The company that publishes the Mr Men books Chorion, which is owned by 3i, has seen losses before tax more than double, but Chairman Waheed Alli says numbers mask fact that Chorion is in intense development phase which will bear fruit in future years, the Daily Telegraph said.

THOMSON REUTERS The global news and information company sold $1.75 billion of notes in two parts, according to International Financial Review, a Thomson Reuters publication.

CARPHONE WAREHOUSE Carphone Wharehouse has expanded U.S. in-store partnership with Best Buy , the world’s biggest electricals retailer, to outlets in China, Mexico and Turkey, the Daily Telegraph said.

CABLE & WIRELESS John Pluthero, head of the UK and international telecommunications businesses at Cable & Wireless, saw his remuneration fall last year by almost 9 percent to 1.26 million pounds, the Financial Times said.

MISYS The company is due to issue its trading update.

WOOLWORTHS The company is due to issue its trading update.

TODAY’S UK PAPERS

> Financial Times > Other business headlines (Reporting by Dominic Lau)