UPDATE 1-Whitehall to hold liquidation sale into holidays

SEATTLE, Aug 12 (Reuters) - Bankrupt Whitehall Jewelers Holdings (WHJHQ.PK) said on Tuesday it will liquidate jewelry worth $750 million at below market prices through the holiday shopping season, after a futile effort to sell itself or secure fresh equity.

The court-ordered sale, which starts Aug. 13, will last through the end of the year.

That could signal tough competition for Zale Corp (ZLC.N), Finlay Enterprises (FNLY.OB), and Kay Jewelers' parent Signet Group PLC (SIG.L), who have already been grappling with weak sales and could do with less competition during the holidays.

According to a group of retail liquidation firms managing the process, the sale will involve 373 Whitehall stores across 39 states, and include 78 store locations Whitehall bought from Friedman's Inc, another bankrupt jeweler, in April this year.

Friedman's was also ordered by a court in April to hold a liquidation sale for jewelry worth about $400 million, also below market value.

Hudson Capital Partners LLC, Great American Group LLC, Gordon Brothers Group LLC and Silverman Jeweler Consultants Inc said they will manage the sale for Chicago-based Whitehall.

"The Whitehall liquidation was ordered after exhaustive efforts to sell the specialty retail chain or obtain fresh equity both proved unsuccessful," Harvey Yellen, chairman of Great American said in a statement.

Several retailers have declared bankruptcy recently, hurt by a slow economy where cash-strapped U.S. consumers, faced with higher food and fuel prices and a housing market downturn, hesitate to spend such non-essential items as jewelry and furniture. Tough credit conditions have also made securing equity difficult.

Adding to concerns is the looming holiday shopping season -- particularly crucial for companies selling traditionally popular gift items, like jewelry and toys.

(Reporting by Aarthi Sivaraman)