UPDATE 3-Pearson raises guidance as ad decline slows

* Raised 2009 earnings forecast beats analysts' estimates

* Education, stabilising ad revenue, Xmas book sales help

* 2010 seen tough; digital learning remains in focus

* Shares down 1.8 percent

(Adds analyst comments, updates shares)

By Georgina Prodhan

LONDON, Jan 19 (Reuters) - British publishing group Pearson (PSON.L) raised its 2009 earnings guidance after an advertising decline slowed in the fourth quarter, the U.S. school publishing market improved, and Penguin books had strong Christmas sales.

Pearson, which owns the world's biggest educational publishing business, the Financial Times and Penguin Books, said on Tuesday it now expects earnings growth of about 10 percent, up from its previous forecast of 4 percent growth.

The rise implies earnings per share of 63.5 pence, beating consensus of 60.61 pence and StarMine's SmartEstimate of 61.69 pence, but Pearson shares fell 1.8 percent by 0840 GMT, the leading decliners in a weak European media index .SXMP.

Pearson shares have gained 52 percent in the last year, outperforming the index by 23 percent, even as many investors have switched to favour more cyclical stocks likely to benefit early from an economic upturn.

A strong U.S. dollar also boosted Pearson's earnings, but was not a factor in the raised guidance. The company makes about 60 percent of its revenues in U.S. dollars.

Analysts welcomed the result but UBS noted that any positive market reaction would likely be tempered by the fact that an upgrade to guidance had been expected.

"There is no comment on trends into 2010, but given the company's strong track record of managing consensus, we would not expect significant upgrades to 2010 numbers as yet," UBS analyst Alastair Reid wrote.

Chief Executive Marjorie Scardino said the company was encouraged by accelerating worldwide take-up of its digital learning products, and continued to take a long-term view.

"We are not counting on any help from the global economy this year, but we still see significant long-term growth opportunities and we are pressing ahead with this successful strategy," she said in a statement.

Pearson has consistently invested in interactive digital learning technology, a strategy that has helped it gain market share in the United States, its biggest market, from rivals led by McGraw-Hill (MHP.N).

McGraw-Hill said last month it expected the education market to improve this year, thanks to pent-up demand for textbooks from schools that cut spending last year, and higher enrolment in schools and colleges.

Education brings in almost two-thirds of Pearson's revenues and operating profit, and the group has been gradually refocusing its portfolio on the education division at the expense of more cyclical and advertising-dependent media.

Last week, Pearson said it may sell its 61 percent stake in financial information provider Interactive Data Corp IDC.N, worth about $1.5 billion at current market valuation.

Goldman Sachs on Tuesday moved Pearson to "not rated", saying it was acting as a financial adviser in connection with a matter fundamental to the reasonable analysis of the stock.

Pearson will report full 2009 results on March 1. (Editing by Louise Heavens) ($1 = 0.6132 pound)