WRAPUP 2-HP to buy 3Com for $3.1 bln; Cisco rivalry heats up

* Deal for $7.90 per share or 39 pct premium

* HP eyes expansion in China, network gear market

* Deal expected to close in first half 2010

* 3Com shares up 35 pct, HP shares edge lower (Adds comments from analysts and executives)

By Ritsuko Ando and Gabriel Madway

NEW YORK/SAN FRANCISCO, Nov 11 (Reuters) - Hewlett-Packard Co (HPQ.N) is making a move into the telecom equipment market by striking a $3.1 billion deal for 3Com Corp (COMS.O), in a major challenge to Cisco Systems Inc (CSCO.O).

The deal is the latest sign that technology giants from IBM (IBM.N) to Oracle Corp (ORCL.O) are increasingly encroaching in each other's markets as they seek to become one-stop shops for computing, networking and storage equipment. Cisco itself this year pushed into the computer server market, of which HP is a major player.

HP, which also reported higher-than-expected preliminary earnings on Wednesday, said it would pay $7.90 per share for 3Com, a 39 percent premium over its closing price. The deal values 3Com at $2.7 billion excluding its net cash.

"Cisco and HP are going to compete more and more," said Jayson Noland, analyst at Robert W. Baird & Co. "We're headed to a world where each of these large companies can give you everything you want."