By Caroline Valetkevitch

NEW YORK, Nov 6 (Reuters) - U.S. retailers are poised to defy gloom next week as earnings expectations have improved, but the big test will be what they say about holiday shopping.

Earnings estimates for Standard & Poor's 500 retailers have headed higher in recent weeks, some after October same-store sales figures were released Thursday 5 November, leaving strategists optimistic about next week's retail results.

The sector takes center stage just as the earnings calendar winds down, with results already in from almost 90 percent of S&P 500 .SPX companies.

Same-store sales were mixed. But several retailers expected to post results next week, including upscale department store chain Nordstrom JWS.N, performed better than expected on the same-store sales front.

That bodes well for next week's results, analysts said, but commentary about store traffic, with the start of holiday shopping less than three weeks away, could be just as important to investors.

"It's all about perception going into Christmas," said Todd Leone, head of listed trading at Cowen & Co. in New York.

The S&P 500 is up 58 percent since its 12-year closing low in early March. But it's down more than 2 percent since mid-October, and investors are anxious to see if the market can hold those gains through the end of the year.

The Friday after the Thanksgiving holiday marks the start of the holiday shopping period, when most retailers traditionally make most of their profits.

Third-quarter earnings for retail apparel S&P 500 companies are seen rising 18 percent, compared with expectations for a gain of just 4 percent just three weeks ago, said John Butters, director of U.S. earnings for Thomson Reuters, in New York.

SLIGHTLY BRIGHTER PROSPECTS

S&P 500 department store earnings are seen declining 48 percent, but that's an improvement from expectations for a drop of 54 percent three weeks ago, he said.

Earnings for the entire consumer discretionary S&P sector, which includes most retailers, are expected to increase 44.7 percent from a year ago, compared with Oct. 1 expectations for a gain of 16 percent, Thomson Reuters data showed.

"If comps (same-store sales) are any indication, there should be some positive surprises," said Fred Dickson, market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.

Retailers have been helped by economic growth, even though employment levels are falling, analysts said.

Friday (6 November)'s government jobs report put the nation's unemployment rate at 10.2 percent, the highest in 26-1/2 years.

But last week, government data showed the U.S. economy expanded at an annual rate of 3.5 percent in the July-September period, ending a string of four down quarters.

"Profit margins widened just as productivity improved," said Charles Lieberman, chief investment officer of Advisors Capital Management, LLC in Paramus, New Jersey.

It may be too early for an indication of holiday spending, since many consumers haven't even begun their shopping, he said.

Still, investors will be listening for comments on store traffic and what consumers are buying, Howard Silverblatt, Standard & Poor's earnings analyst, said.

Other big retailers on next week's earnings roster include Wal-Mart Stores (WMT.N), the discount behemoth that's also the world's largest retailer, and JCPenney (JCP.N), the mid-priced department store operator.

The retail reports follow a string of stronger-than-expected earnings reports, with about 80 percent of companies beating analysts' estimates, according to Thomson Reuters data.

Earnings for the entire S&P 500 now are seen declining 14.8 percent, better than last week's estimate for a drop of 17.5 percent. The estimates combine actual results from companies that have reported and estimates for companies yet to report.

Oct. 1 expectations were for a 24.7 percent decline. (Reporting by Caroline Valetkevitch; Editing by Jan Paschal)