WRAPUP 4-Philip Morris, Reynolds show tobacco's strength

* Reynolds Q3 EPS $1.29 before items, beats view

* Philip Morris Q3 EPS 93 cents before items, beats view

* Reynolds raises 2008 forecast

* Philip Morris sees 2008 profit at low end of range

* Philip Morris stock off 2 pct, Reynolds little changed (Recasts, adds analyst and company comments)

By Brad Dorfman

CHICAGO, Oct 22 (Reuters) - Profits for Philip Morris International Inc and Reynolds American Inc proved the resilience of tobacco products in a global economic slump, but new pressures from a stronger dollar and cigarette taxes could strike in the coming year.

Both companies posted better-than-expected quarterly results on Wednesday, showing, in part, that they could raise cigarette prices without losing many consumers.

Vice Fund VICEX.O portfolio manager Charles Norton said the results for Philip Morris show "the strength and resilience of tobacco in this type of economy" and the strength of consumers in emerging markets. The Vice Fund held 295,000 Philip Morris shares as of Sept. 30, making the stock its largest holding.

The Reynolds profits bode well for Altria Group (MO.N), the former parent of Philip Morris International, and Lorillard (LO.N), Goldman Sachs analyst Judy Hong said.

"Industry pricing remains healthy and industry volumes only decreased about 3.4 percent" compared with a forecast of closer to 4 percent, Hong said in a note.

Yet Philip Morris International (PM.N), home to the Marlboro brand, said its full-year profit could be at the low end of its previous forecast as a recovering dollar erases a boost it has enjoyed for at least two years.

Reynolds (RAI.N), the No. 2 U.S. cigarette company and maker of Camel and Pall Mall, faces potential increases in federal excise taxes after the November U.S. presidential election, analysts said.

Some local governments are also likely to raise taxes to try to cover budget shortfalls, and higher federal and local taxes could push more consumers to lower-priced cigarettes.

"I think we would have expected '09 to be a more difficult year than '08," Reynolds CEO Susan Ivey said in a conference call with analysts, referring to the tax issue.

Philip Morris shares fell 2 percent to $41.31, while Reynolds was little changed.