* University of Michigan consumer sentiment data, leading indicators on tap
* J.C. Penney dips after earnings
* Futures up: Dow 39 points, S&P 5 points, Nasdaq 8.25 points
By Chuck Mikolajczak
NEW YORK, May 17 (Reuters) - U.S. stock index futures rose on Friday, indicating the S&P 500 will rebound from its worst decline in nearly three weeks, keeping the index on track for its fourth straight weekly advance ahead of data on consumer sentiment.
The benchmark S&P index fell 0.5 percent in the prior session, its biggest decline since May 1, after a Federal Reserve official said the U.S. central bank could begin reducing its monetary stimulus program this summer.
The central bank's program of $85 billion a month in bonds has been a major driver of the rally in equities that has taken both the Dow and S&P 500 indexes to record highs and sent both indexes up about 16 percent for the year.
"There is this money that has been sloshing around the system; people are chasing yield, they have to, they are not getting any kind of yield on the bank deposits or bond portfolios - so it's going into the equity markets," said Keith Bliss, senior vice-president at Cuttone & Co in New York.
Data expected on Friday includes the Thomson Reuters/University of Michigan Surveys of Consumers preliminary May consumer sentiment index at 9:55 a.m. (1355 GMT). Economists in a Reuters survey expect a reading of 78.0 compared with 76.4 in the final April report.
At 10 a.m. (1400 GMT) the Conference Board is due to release its report on April leading economic indicators. Economists in a Reuters survey forecast a 0.2 percent rise compared with a 0.1 percent drop in March.
The stimulus measures taken by central banks around the globe have enabled investors to shrug off more recent economic data indicating only sluggish improvement in the U.S. economy.
S&P 500 futures rose 5 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones (DJI: ^DJI - news) industrial average futures gained 39 points, and Nasdaq 100 futures added 8.25 points.
J.C. Penney Co Inc shares shed 1.8 percent to $18.45 in premarket trade after the retailer reported another steep quarterly loss on weak sales and heavy clearance deals and Chief Executive Myron Ullman cautioned he needs time to fix the issues of the retailer.
S&P Dow Jones Indices said after the close on Thursday that S&P MidCap 400 component Kansas City Southern will replace Dean Foods Co in the S&P 500.
Aruba Networks Inc (NasdaqGS: ARUN - news) plunged 21.6 percent before the opening bell after the network equipment maker released fourth-quarter results well below Wall Street expectations, hurt by rising competition from Cisco Systems Inc (NasdaqGS: CSCO - news) .
European shares held near multi-year highs in volatile trade, with some investors using early weakness as a buying opportunity and with carmakers cheered by signs of a revival in domestic sales.
Asian shares were mixed, although some individual Asian stock markets pushed higher, with mainland Chinese shares up 1.5 percent and Japan's Nikkei share average advancing 0.7 percent.