UPDATE 3-U.S. stock markets expect to reopen on Wednesday

* Wednesday, end of month, key day to resume trade

* NYSE, Nasdaq OMX testing trading systems on Tuesday

* Sandy delays dozens of U.S. earnings season reports

Oct 30 (Reuters) - Major U.S. stock exchanges expect to open on Wednesday after a monster storm shut down their trading for two days.

NYSE Euronext said the New York Stock Exchange would open, although it would switch to fully electronic trading if necessary. Nasdaq OMX's Nasdaq Stock Market will be operating on Wednesday as well, a source familiar with the matter said.

U.S. exchanges, banks, brokers, and others conferred for hours on Tuesday morning about the feasibility of resuming trade.

The southern tip of Manhattan where Wall Street and the NYSE are located lost power on Monday after being buffetted by Sandy, the worst storm to hit New York since at least 1938.

The New York Stock Exchange, which accounts for about a quarter of U.S. stock market trading volume, is testing the possibility of routing all trades through its electronic platform, Chief Operating Officer Larry Leibowitz said in an interview. Under normal conditions it handles about half its volume through its trading floor downtown.

The NYSE has backup generators and 40 hours worth of fuel, Leibowitz said.

Bond markets were also closed on Tuesday, with traders aiming to reopen on Wednesday.

JPMorgan Chase & Co, the largest U.S. bank, expects many employees will be able to return to buildings starting on Wednesday, according to an internal memo obtained by Reuters.

One of Citigroup's main investment banking buildings at 388 Greenwich Street in Manhattan had minor flooding, and is without power, an internal memo said. The building sits by the Hudson River. A smaller Citigroup building by the Hudson River is running on a generator. The bank expects both to be accessible within two days.

Plans to resume trading will be complicated by the lingering effect of the storm on New York. Sandy brought a record storm surge that flooded subway tunnels. The city's subway service is not likely to resume for four to five days, Mayor Michael Bloomberg said on Tuesday.

If NYSE Euronext's New York Stock Exchange headquarters and trading floor are unavailable on Wednesday, trading in NYSE-listed securities will be executed on the Arca exchange, the exchange operator said in a notice issued to traders late Monday. ()

``We stress that, as of now, there has been no damage to the NYSE Euronext headquarters that would impair trading floor operations,'' NYSE said in the notice.

The NYSE's headquarters is a few hundred yards (meters) up the street from areas of lower Manhattan that have been evacuated.

Nasdaq OMX said in a trader alert late on Monday it would operate its production system in a testing capacity from 7:30 a.m. (1130 GMT) to 12 p.m. (1600 GMT). ()

The NYSE said on Sunday afternoon it planned to close its trading floor and to move all trading to its electronic market.

It backtracked on that idea after traders and regulators expressed concern about moving everything to the all-electronic venue, a plan tested on March 31 but never used live, given the difficulties and low staffing levels due to the storm.