UPDATE 2-Target steps up holiday toy price wars

* A break for holiday shoppers

* Discounted items include Barbie Fashion Doll, G.I. Joe (Adds background, previous dateline NEW YORK)

SEATTLE, Oct 7 (Reuters) - Target Corp (TGT.N) fired back at rival Wal-Mart Stores Inc (WMT.N) with price cuts of as much as 50 percent on toys like Barbie and G.I. Joe, as it works to woo shoppers to its stores during the holiday season.

The retailer's move on Wednesday comes mere days after Wal-Mart expanded its $10 holiday toys program, offering more than 100 toys including Mattel Inc's (MAT.O) Barbie dolls and some board games for $10 each during the Christmas shopping season. [ID:nN28101572]

Target is countering with items like $5 Barbie dolls and a $15 G.I. Joe action figure made by Hasbro Inc (HAS.N). Target's discounted items also include the Fisher-Price Little People Play 'N Go Farm Set 50th Anniversary edition for $11.

Target, whose price cuts on toys began on Oct. 1, has said there is a perception among shoppers that its competitors offer lower prices. It has worked this year to change that view.

It is placing a bigger emphasis on the "Pay Less" side of its "Expect More. Pay Less" tagline and adding signs in stores that point out deals under $5, under $10 or under $15.

Target, which has also been touting its ability to match rivals' prices, said that if it does not offer the lowest price, Target stores nationwide will match locally advertised prices on identical items.

The holiday shopping season is critical for toymakers and retailers alike as parents usually splurge on gifts for children even when cutting back spending on themselves. But the 2008 holiday sales season was dismal, forcing toy companies to rework their strategy for this year.

Mattel and Hasbro are making fewer products and emphasizing new items at lower prices, realizing that consumers may not want to shell out hundreds of dollars for toys.

Meanwhile, retailers like Toys "R" Us, Wal-Mart and now Target are touting affordable toys to draw shoppers, even as predictions for popular holiday toys have started to come in.

Certain Barbie dolls, Nerf Blaster guns and the Beatles Rock Band video game are some of the toys expected to fly off shelves this holiday season, one list showed. [ID:nN30235456]

Target's stock edged up 5 cents to $48.14, while Wal-Mart fell 7 cents to $49.41 on the New York Stock Exchange late Wednesday afternoon.

(Reporting by Aarthi Sivaraman and Dhanya Skariachan; Additional reporting by Nicole Maestri; Editing by Gunna Dickson and Richard Chang)