US STOCKS-Profit-taking likely to lead to flat open

* Investors pause after Tuesday's surge, before Fed

* Federal Reserve expected to cut interest rates

* Signs of thawing credit markets offer positive spur

* Energy stocks up on higher oil price; airlines drop (Recasts first paragraph, adds details, update prices)

By Ellis Mnyandu

NEW YORK, Oct 29 (Reuters) - U.S. stocks headed for flat open on Wednesday as profit-taking and concerns about rising oil prices offset optimism about a possible interest-rate cut and signs of a thaw in credit markets.

A day after after Wall Street roared to its second-best advance ever, investors paused to gauge if the market would continue to bounce back from its lowest levels in more than five years.

Tuesday's surge on Wall Street helped fuel an advance in other stock markets, with Asia up sharply overnight, and European benchmark indexes up about 5 percent on Wednesday.

There remain worries about the severity of a global recession, said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey. In addition, higher oil prices looked set also to give investors pause, with U.S. crude up 6 percent at $66.53 a barrel

"We are going to see some profit taking and people will wait for the Fed news. Yesterday's move was driven by expectations that the Fed will do something," he said.

"At the same time, yesterday's rally may make some people to pause and ask if this isn't the time to actually get out. That mind-set is still out there."

S&P 500 futures SPc1 edged up 0.3 point and were about even with fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures DJc1 fell 29 points, and Nasdaq 100 NDc1 futures shed 6.75 points.

The Federal Reserve is widely expected to cut its benchmark fed funds rate by at least 50 basis points from the current 1.5 percent. Its decision is expected around 2:15 p.m. (1815 GMT).

"What the Fed says on the economic outlook, I think is what's going to dictate the market's next move," added Bakhos.

Energy shares, including Exxon Mobil Corp (XOM.N: Quote, Profile, Research) , were expected to rise with oil prices. But higher energy costs also were likely to create headwinds for retailers and airlines, with Delta shares (DAL.N: Quote, Profile, Research) off 3.3 percent at $7.89 before the bell.

U.S. stock futures had briefly added to gains before the open on a government report that showed a surprise increase in new orders for long-lasting manufactured goods in September.