US STOCKS-Wall St up in volatile trade following Yellen comments

* Indexes set for second weekly loss in a row

* Wall St seesaws after Yellen remarks

* Indexes up: Dow 0.5 pct, S&P 0.3 pct, Nasdaq (Frankfurt: 813516 - news) 0.2 pct (Updates to late afternoon)

By Caroline Valetkevitch

Oct (HKSE: 3366-OL.HK - news) 14 (Reuters) - U.S. stocks held modest gains in volatile Friday afternoon trading as investors assessed comments by Federal Reserve Chair Janet Yellen on the U.S. economy.

Yellen, in a speech at a conference of policymakers and top academics, laid out the deepening concern at the Fed that U.S. economic potential is slipping - and may need aggressive steps to rebuild it.

Traders have currently priced in a 67-percent chance of a rate hike in December, while the odds for November are minimal as the Fed's meeting falls just days before the Nov. 8 U.S. presidential election.

"Is Chair Yellen now adding yet another reason for holding off raising rates in December? We'll have to watch the data as (we) move towards the mid-December FOMC meeting and more carefully monitor ... Yellen's guidance," said Quincy Krosby, market strategist at Prudential Financial (NYSE: PJH - news) .

Gains in bank shares helped to support the market, with the S&P 500 financial index up 0.8 percent, though shares of JPMorgan (LSE: JPIU.L - news) , Citigroup (NYSE: C - news) and Wells Fargo (Hanover: NWT.HA - news) were mostly flat following their results.

The Dow Jones industrial average was up 95.79 points, or 0.53 percent, to 18,194.73, the S&P 500 gained 6.85 points, or 0.32 percent, to 2,139.4 and the Nasdaq Composite added 11.72 points, or 0.22 percent, to 5,225.05.

Shares (Berlin: DI6.BE - news) of Twitter (Frankfurt: A1W6XZ - news) fell 5.9 percent after Salesforce.com's chief executive ruled out bidding for Twitter. Salesforce.com shares jumped 6.3 percent.

HP Inc (Frankfurt: 7HP.F - news) fell 3.4 percent after the company said it would cut about 3,000 to 4,000 jobs over the next three years.

Advancing issues outnumbered declining ones on the NYSE by a 1.41-to-1 ratio; on Nasdaq, a 1.11-to-1 ratio favored advancers.

The S&P 500 posted 3 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 23 new highs and 73 new lows. (Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Nick Zieminski)