NEW YORK (Reuters) -
Wal-Mart Stores Inc is cutting prices on popular toys and ramping up the opening of Christmas shops in its U.S. stores as the retailer tries to win sales from cash-strapped shoppers ahead of what could be the worst holiday season in 17 years.

Wal-Mart said on Wednesday that it will sell ten toys, including certain Barbie dolls and Tonka trucks, for $10 each. It is also putting its Christmas shops on the "fast track" and intends to open the shops, which sell ornaments and holiday decor, in its stores nationwide by October 10.

Wal-Mart spokeswoman Linda Blakley said its shoppers, who are increasingly living paycheck to paycheck, are indicating that they will start their holiday shopping earlier this year to stretch their limited budgets.

"Given current conditions, some (shoppers) need to spread out their Christmas shopping over a longer time-frame than they may have last year," she said.

Last year, Wal-Mart cut prices on hot toys on September 30 to try to persuade hesitant shoppers to spend on holiday items.

But this year, retailers are bracing for what some economists predict could be the worst Christmas season since 1991, when the nation had only recently emerged from a recession.

Consumers, battered by the housing market downturn, surging food and fuel costs, a credit crunch, and a weakening job market, have shown an increasing reluctance to spend this year. The recent turmoil on Wall Street and in the stock market has only made the outlook for the season only more precarious.

This year, Wal-Mart has been heavily emphasizing its low prices, and its sales have been outpacing those of its competitors as shoppers head to its stores for discounts on food, toiletries and electronics.

To deal with the tough economy, Wal-Mart said shoppers are indicating they will purchase less expensive items, to start their Christmas shopping earlier or purchase presents for fewer people on their list.

Wal-Mart is not alone in trying to get shoppers into the holiday mood. Macy's Inc has set up its Holiday Lane Christmas shops in its stores, while discount retailer Target Corp is also selling holiday ornaments and decor.

(Editing by Gary Hill)

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