GLOBAL MARKETS-Dollar weakens on consumer data, stocks up

* U.S. dollar sinks on falling U.S. consumer sentiment

* Stocks advance on upbeat outlook from retailers

* Gold pushes up toward record highs

By Daniel Bases

NEW YORK, Nov 13 (Reuters) - Investors were pulled in different directions on Friday, with a grim U.S. consumer outlook tugging the dollar lower while upbeat comments from big U.S. retailers helped stoke a rally in stocks.

Euro zone data showed the region resumed growth, while a widening September U.S. trade deficit compounded the selling of the U.S. currency.

Share prices in Britain closed at a 14 month high, helped by banking an commodity stock gains while European shares in general ended the week at three week peaks.

Gold rose toward a new record, aided by the weak U.S. currency, which also contributed to higher grain prices. But the weak consumer and trade data undermined crude oil prices.

"There is increasing evidence that the recovery in the U.S. is much more vulnerable than previously thought, which provides another reason for traders to bail out of U.S. dollars," said Kathy Lien, director of currency research at GFT Forex in New York.

"The Federal Reserve has all the right reasons to (keep) monetary policy easy for a very long time," she added.

The volatile trading belies an uncertain investment environment where doubts remain over whether economic revival is taking a firm hold or still dependent on government stimulus and low interest rate policies.

In the currency markets, the euro was up 0.53 percent at $1.4921 against the greenback. Against the Japanese yen, the dollar was down 0.92 percent at 89.55.

The ICE Futures U.S. dollar index <.DXY>, a gauge of the greenback against six other major currencies, fell 0.51 percent to 75.22, just above Wednesday's 15-month low.

A report showed the euro zone economy grew 0.4 percent quarter-on-quarter after five consecutive quarters of shrinking output, lower than forecasts of 0.5 percent. [ID:nBRQ009592]

"It's encouraging to see that the euro zone has returned to growth in the third quarter," said RBS currency strategist Paul Robson.

"Data out of China has been robust and policymakers around the world have indicated that they will keep monetary policy loose, which is broadly supportive of higher-yielding and commodity-related currencies," Robson said.

HEARTS, MINDS AND WALLETS

Data from the Reuters/University of Michigan Surveys of Consumers showed U.S. consumer confidence fell to its weakest in three months amid dismal expectations for job and income prospects. [ID:nN13465986] [ID:nNYS007529]

Speaking to Reuters Insider television, Richard Curtin, the director of the consumer survey offered a counter argument to the retailers, saying purchase plans are being shelved and retail sales will not be robust.

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Curtin said the survey found just one in 10 consumers saw an increase in their income, the fewest recorded in data going back to 1946, and that 36 to 37 percent of those surveyed said their income had declined.

"This is really a concern for consumers that their financial situation is just heading south, and there is really little hope that they can expect to improve in the year ahead," he said.

Curtin said retailers will certainly discount merchandise.

But reports from retailers JC Penney and Abercrombie & Fitch Co showed earnings either met or beat analyst expectations, helping U.S. stocks advance.

"When we get depressed, we go shopping," said Jeff Kleintop, chief market strategist at LPL Financial in Boston.

About 1 p.m. (1800 GMT) the Dow Jones industrial average <.DJI> was up 96.36 points, or 0.94 percent, at 10,293.83. The Standard & Poor's 500 Index <.SPX> was up 9.27 points, or 0.85 percent, at 1,096.51. The Nasdaq Composite Index <.IXIC> was up 20.94 points, or 0.97 percent, at 2,169.96.

The FTSEurofirst 300 .FTEU3 index of top European shares rose 0.4 percent to 1,019.41 points, its highest close since Oct. 21, and just 0.7 percent short of a 13-month closing high.

Japan's Nikkei-225 index .N225 fell 0.4 percent.

The benchmark 10-year U.S. Treasury note was down 2/32, with the yield at 3.4513 percent. The euro zone's 10-year Bund yielded 3.382 percent , up 2 basis points from late Thursday trade.

Spot gold prices rose $11.80, or 1.07 percent, to $1,115.20, while U.S. light sweet crude oil CLc1 fell 14 cents, or 0.18 percent, to $76.80 per barrel.

Wheat and soybean prices rose while corn fell. (Additional reporting by Chris Reese, Wanfeng Zhou, Rodrigo Campos in New York; Dominic Lau, Jessica Mortimer in London; Wayne Cole in Sydney; and Miho Yoshikawa in Tokyo; Editing by Kenneth Barry)