(Reuters) - Stocks rose on Friday, extending the previous session's sharp rise as data showed retail sales posted their biggest gain since March.

A rally in Europe and another strong outlook from a technology company also helped boost the market following a very volatile week. The S&P 500 is on the way toward its first two-day streak since July 21-22. The index has fallen for 11 of the past 14 days.

U.S. retail sales in July climbed 0.5 percent, in line with forecasts, while sales, excluding autos, increased 0.5 percent, above forecasts.

"What traders are looking for is how companies will be able to sustainearnings growth in this environment, and they can't do that without consumers spending money," said Todd Schoenberger, managing director at LandColt Trading in Wilmington, Delaware. "This data shows that consumers are still spending, and that's very encouraging."

The Dow Jones industrial average was up 107.32 points, or 0.96 percent, at 11,250.63. The Standard & Poor's 500 Index was up 8.80 points, or 0.75 percent, at 1,181.44. The Nasdaq Composite Index was up 7.99 points, or 0.32 percent, at 2,500.67.

European shares were up nearly 3 percent following a short-selling ban on financial shares by France, Italy, Spain and Belgium and as European Central Bank data eased fears some banks faced liquidity issues.

Nvidia Corp forecast a larger-than-expected jump in quarterly revenue late Thursday, sending its shares up 6 percent to $14.22. The outlook comes after similarly bullish comments from Cisco Systems Inc on Wednesday.

J.C. Penney Co Inc forecast weaker-than-expected third-quarter earnings and further erosion in its gross margin. The stock fell 2.3 percent to $26.19.

The preliminary August Thomson Reuters/University of Michigan Surveys of Consumers sentiment index will be released at 9:55 a.m. EDT, and is seen at 63 versus 63.7 in the previous month.

(Editing by Jeffrey Benkoe)

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