Pull out your shotgun and blast her until she falls back, grabbing the catseye from the ground and running back the way you came. We were able to avoid them while playing the main game as Leon, but unfortunately you can't this time. Either kill the enemies here or run past them, continuing down the path until you reach one of the Bella sisters at the end.
Run through the cemetery, keeping right as you enter the church yard and down the wooden walkway.
There's a woman with a knife at the top of the ladder, so put her down and shoot the grenade out of the nest above you. Open it on the Ganado trying to enter, then run past him to the ladder up. Open the hatch and jump down, taking the ammo along the way and running to the door the merchant was originally standing by. When you're done with him, go through the door and break the barrel for an herb. I suggest buying it, maybe even selling your Blacktail to ease the burden a bit. Our mercantile friend is on the right, and he has a TMP for sale.
