UPDATE 1-Payless to launch eco-friendly "green" shoes

(Recasts; adds details about new line, updates stock movement)

Oct 13 (Reuters) - Payless ShoeSource, a unit of footwear retailer Collective Brands Inc (PSS.N), plans to launch a line of affordable eco-friendly shoes, marking the company's entry into the "go-green" movement that has recently caught on with retailers.

"Green" is now a major marketing gimmick, with big players such as Nike Inc (NKE.N) recognizing its importance among global shoppers. Even retailing giant Wal-Mart Stores Inc (WMT.N) is offering more organic goods.

Payless' new environment-friendly footwear line, expected to hit stores early next year, is a part of the shoe retailer's strategy to position itself as a discount retailer of new brands.

Footwear and accessory products in the new line will be made using eco-friendly materials such as organic cottons and linen, natural hemp and recycled outsoles, and come in "eco-smart" packing.

The line will launch initially for women, and be available at a price, on average, of below $30 a pair in about 500 stores.

Payless said it plans to refresh the line every season, and expand it to include kids' and men's styles.

The brand name for the line will be announced closer to when the shoes are available in stores next year.

Shares of Topeka, Kansas-based Collective Brands were trading up 28 cents at $14.72 Monday afternoon on the New York Stock Exchange. (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Pratish Narayanan)