UPDATE 5-U.S. shoppers seek deals, buy less on Black Friday

(Adds quotes, mall details)

By Alexandria Sage and Aarthi Sivaraman

SAN FRANCISCO/NEW YORK, Nov 28 (Reuters) - Shoppers lured by money-saving deals filled U.S stores on Friday, but the annual kick-off to holiday shopping appeared weaker this year as worries about a deep recession kept purchases down.

The day after the U.S. Thanksgiving Day marks the traditional start of the holiday shopping season, when retailers can make up to 40 percent of their annual sales. Crowds gathered outside stores for predawn deals.

The frenzied bargain-hunting took a somber turn at one Long Island, New York store, where an employee at Wal-Mart in Valley Stream died after a throng of shoppers broke down the doors to enter the store at 5 a.m. EST (1000 GMT), police said. Four others were hurt in what Wal-Mart called a "tragic" incident.

To generate excitement during what some experts predict may be the bleakest holiday shopping season in nearly two decades, retailers from Wal-Mart Stores Inc to Macy's Inc , Kohl's Corp and Best Buy Co Inc opened their doors early on "Black Friday".

This holiday weekend will test the strength of consumer sentiment, a main driver of the U.S. economy, as the country faces its worst financial crisis since the Great Depression.

Marjorie Daube, 59, of Manhattan scaled back her shopping and was only buying sale items, aware that her husband's bonus at a financial firm would decline this year.

"Shopping was never fun at all, and it's less fun now," Daube said.

Natalie Diaz, 32, planned to cut by half the $2,000 she shelled out last year for Christmas gifts, but said she would not scrimp on presents for her twins.

"Santa does not have a recession," she said, shopping at a J.C. Penney Co Inc store in Jersey City, New Jersey.

Michele Greaves, browsing in a Brooklyn mall, said she would buy her children only one present each this year.

"I'm penny-pinching, and I ask myself, 'Do you really need that?' My kids are small. I have to save," Greaves said.

MORE TRAFFIC, FEWER BAGS

Early store traffic was lighter this year, but picked up by midday, said Marshal Cohen, chief retail analyst at NPD Group.

"The traffic is up compared to last year, but the bag count is down," he said. "There may be more casual shoppers, but they're not buying as much as last year."

Britt Beemer of America's Research Group said he saw shoppers carrying 25 to 40 percent fewer bags this year.

"If the item was there, they bought it. If it wasn't there, they left," said Beemer, calling this year's customer a "hit-and-run shopper."

A weak view of holiday sales was evident on Wall Street on Friday. The Standard & Poor's Retail Index <.RLX> slipped 1.6 percent on Friday and is down 36 percent so far this year, versus a 39 percent drop for the S&P 500 index <.SPX>.

Consumer electronics, toys and clothing were the goods in highest demand, from flat-screen televisions to cashmere sweaters, according to the National Retail Federation.

At one Best Buy in New Jersey it took up to 1-1/2 hours for a crowd of 700 to 1,000 people to enter the store at 5 a.m., a manager said.

Cars were parked on the lawn and sidewalk outside a Circuit City store in Burlington, Massachusetts, after the bankrupt retailer announced six-hour specials.

Best Buy President Brian Dunn told Reuters he was pleased with customer response to its offers.

"It's almost cathartic to see people out there buying again and focusing not so much on the fear and the drudgery of the tough news that we're all dealing with," Dunn said.

Parking lots at Taubman Centers Inc malls in New Jersey, Virginia, Michigan and Connecticut were nearly 100 percent full by the afternoon, a spokeswoman said.

Still, holiday traffic is not the best indicator of sales, since shoppers may balk at buying once they arrive, or buy sparingly. Deep price cuts mean stores may need to sell twice the merchandise to preserve profits, said NPD's Cohen.

One Macy's employee in San Francisco, Michael Vaughan, said he booked $3,000 in sales in the first three hours the store was open, but associates told him the norm for that period for "Black Friday" was four times that amount.

WAL-MART PROSPERS

Discounters like Wal-Mart have prospered in recent months as more consumers seek out low prices. But mid-tier retailers like department store operator Macy's and specialty chains such as AnnTaylor Stores Corp are fighting to retain customers and eke out profits.

Retail sales at U.S. stores open at least a year could fall 2.4 percent in November, or 7.1 percent excluding Wal-Mart, compared with 4 percent growth last year, based on analysts' forecasts compiled by Thomson Reuters.

Macy's Chief Executive Terry Lundgren said the company has worked closely with its vendors to craft discounts without cutting too deeply into its own margins.

"One of the great advantages of being the largest customer to practically everyone you do business with is sharing in margin with our vendors and suppliers," Lundgren told Reuters.

Sales of clothing and big-ticket luxury items have been hit particularly hard as consumers cut back on everything but the most basic items. Electronics sellers and toy stores hope their goods will remain on the must-have lists of gift givers.

Online retailer Amazon.com Inc said Apple Inc's iPod personal music and video player was the No. 1-selling item on its website in the first 11 hours on Friday.

Some shoppers felt deflated by "Black Friday's" sales.

"It was alright," said Christal Horton, at a Brooklyn Target Corp store. "I thought it would be cheaper."

Shoppers who held back on Friday may be expecting deeper discounts later in December. (See http://www.reuters.com/news/globalcoverage/holidayshopping for Reuters holiday coverage and http://blogs.reuters.com/shop-talk/ for Shop Talk -- Reuters' retail and consumer blog) (Additional reporting by Sarah Coffey, Ellen Wulfhorst and Martinne Geller in New York and Karen Jacobs in Wisconsin; Editing by Gerald E. McCormick and Jeffrey Benkoe)