UPDATE 3-Kohl's to offer wider price cuts for holidays

(Adds stock moves)

NEW YORK, Nov 20 (Reuters) - Kohl's Corp (KSS.N) said on Thursday it would offer deeper discounts on more products after Thanksgiving Day next week, as U.S. retailers brace for what is expected to be the worst holiday shopping season in nearly two decades.

Kohl's, a mid-priced retailer of clothing and home goods, said it would substantially increase its marketing and cut prices to attract bargain-hunters on Black Friday, the day after Thanksgiving. The announcement comes a week after the department store operator cut its earnings outlook for the rest of the year.

U.S. retail chains traditionally launch their big holiday promotions the day after Thanksgiving in late November, but many have started to offer discounts far earlier this year as the economy weakens.

"We know the economic reality customers are facing this holiday season, and in response, Kohl's remains focused on helping customers stretch their budgets," Chief Executive Kevin Mansell said in a statement.

J.C. Penney Co Inc (JCP.N) and other department store chains plan similar increases in holiday promotions and marketing, as U.S. consumers grappling with a contracting economy have pulled back on purchases of all but essential items. Analysts expect shoppers to keep a tight grasp on their wallets well beyond December.

Limited Brands, whose main chains are Victoria's Secret and Bath and Body Works, also expects to be more promotional than previously planned, the retailer said Thursday on a call with investors.

Last week, Kohl's and Penney, as well as Macy's Inc (M.N) and upscale retailer Nordstrom Inc (JWN.N), reported sharply lower quarterly profits and warned of worse-than-expected results for the rest of the year if deteriorating sales trends continue.

The cost of insuring debt issued by Macy's and Limited against possible default rose to distressed levels on Thursday, reflecting investor concerns about the outlook for the sector.

Shares of Kohl's rose 2.3 percent to $27.00 on the New York Stock Exchange. Macy's climbed 7.92 percent to $6.13 at mid-afternoon after hitting a 52-week low of $5.07 earlier in the session. (Reporting by Sarah Coffey in New York and Ajay Kamalakaran in Bangalore; Editing by Lisa Von Ahn, Andre Grenon, Richard Chang)