MILAN, Dec 15, 2001/ --- As in so many other places, Natale and Capodanno (Christmas and New Year's) will have a special meaning in Milan this year. Things will be more focused on traditions, family and friends, and more people will stay closer to home. But that doesn't keep things from being altogether festive, in a very Italian way.

Milan's central Piazza del Duomo is decked out with fir trees, and white hanging lights adorn downtown streets. The city is livelier than usual, with bagpipe players and other street artists entertaining the crowds. Sweets and handcrafted wares are on display in local holiday markets. The traditional Oh Bej! Oh Bej! (Oh Beautiful! Oh Beautiful!) artisan fair that wrapped up this weekend attracted its usual mass of visitors.

As is the case in the U.S., Christmas in Italy also means shopping. And despite worries of a sharp drop in sales for the holidays, a recent visit to upscale Italian retailer Rinascente suggested otherwise. The Milanese jam-packing the shop seemed to have enthusiastically heeded the call from overseas to spend.

Indeed, a study done by market research group Swg for Italian retailers' association Confesercenti has forecasted that Italians will actually spend slightly more this holiday period. "The climate of uncertainty following the events of September 11 won't have the effect foreseen by many of reducing Christmas spending," the association wrote.

But it has had an effect. "Italians have chosen to have a more intimate Christmas and New Year's this year, less festive, with relatives and their closest friends to share and overcome this difficult moment," Confesercenti chairman Marco Venturi noted.

While some forecasters are more pessimistic, all seem agreed that this year will be one in which traditions are important. And what could be more traditional than eating in Italy? Trade association Confcommercio expects that 42% of all Christmas spending will be on food. Gift baskets heaped with parmesan cheese, prosciutto, candies, other edible delicacies and wine are expected to be a favorite present. In Milan, panettone, a traditional sweetcake whose popularity has spread out way beyond the city, is always a bestseller. It is best served accompanied by a bottle of chilled sparkling spumante.

Millions of bottles of the bubbly are also served at New Year's, along with zampone (pigs feet) stuffed with lentils to bring good luck in the coming year. Fireworks are a must to ring in the New Year in many Italian families. Luckily, they are relatively a low-key (and less dangerous) affair in Milan than in some parts of the country.

As should be the case, Italian bambini are at the heart of holiday celebrations. Besides presents from their relatives, Italian children also receive gifts from Babbo Natale, otherwise known as Santa Claus. On January 6, Epiphany and the last day of the holiday season, they receive a present from a witch called the Befana. Here in the north of Italy, Christmas trees are also a hit, although some people also take great pride in their manger scenes.

Italian children are globally minded when it comes to gifts - they want what every kid wants: Girls want Barbie dolls, Barbie's dreamhouse and camper; boys want Playstation 2. Harry Potter books and gadgets are a favorite with both boys and girls, a fever that is sure to be fed when "Harry Potter and the Sorcerer's Stone" hits Milan theaters over the weekend.

But according to the Swg-Confesercenti survey, people are also ready to lavish money on their mates this year. Favored clothing gifts will include the traditional sweater, leather goods and other accessories. Perfume and books are also big sellers. Confcommercio cautioned, however, that many Italians may wait until post-Christmas sales to purchase clothing and accessories, which are expected to account for around one-fifth of all holiday purchases.

Italians are also expected to continue with their technology kick, purchasing DVDs and video cameras in droves. But the country's fascination with cellular phones apparently seems to have neared a saturation point, studies show.

Among the hit gifts of the year are items related to the introduction of the euro on January 1, 2002, like coin purses to hold euros, euro starter kits and a new version of Monopoly in euros. Italian Prime Minister Silvio Berlusconi is also planning to get into the act, and has announced plans for the prime minister's office to finance a gift for all Italians: a euro calculator.