When top U.S. retailers post their December sales this week, Wall Street analysts expect them to report a healthy end to the holiday season, helped by discounts, improved consumer sentiment and tactics such as extended hours and layaways.

Some 22 major chains, from Macy's Inc and Target Corp to Costco Wholesale Corp and Gap Inc, should post an aggregate 3.4 percent increase in December sales at stores open at least a year, according to Thomson Reuters, capping a season that started moderately but gained steam in December.

The big challenge for retailers this holiday season was how to attract shoppers without decimating margins.

"Ever since the recession, retailers have had to do a lot more to get shoppers to open their wallets," said Catherine Moellering, an executive vice president at retail consulting firm Tobe.

Companies such as Macy's, which offered a lot of exclusive merchandise, were better able to hold on to their pricing power, she said.

Other top gainers are expected to be discount chains such as Costco, with its cheaper gasoline, and Target as shoppers sought out low prices.

Higher up the price spectrum, chains such as Saks Inc, and Nordstrom Inc should also do well, helped by the continued recovery of high-end spending and a stock market that rebounded after swooning earlier in the fall.

Overall sales picked up in the second half of December and Macy's and Victoria's Secret parent Limited Brands Inc have enjoyed better-than-expected sales this holiday season, said Nomura Equity Research analyst Paul Lejuez.

J.C. Penney Co Inc was one of the most "promotional" retailers in the days after Christmas, he said.

Penney and Gap, which are under pressure to slash prices to lure price-conscious shoppers, are expected to be laggards again after seeing sales declines in November.

Penney comparable sales should be up 0.2 percent, while Gap's are expected to slip 1.2 percent, hurt by a 2.7 percent drop at its low-price Old Navy chain, according to Thomson Reuters data. read the full article at www.Reuters.com