* Bank shares weak after JPMorgan reveals loss * Sector was already pressured by Europe, growth fears * Nvidia rallies after results, lifting Nasdaq * Dow up 0.04 pct, S&P up 0.10 pct, Nasdaq up 0.5 pct By Edward Krudy NEW YORK, May 11 (Reuters) - U.S. stocks edged up on Friday after a strong outlook from chipmaker Nvidia and surprisingly robust consumer confidence offset a slide in bank shares after disclosures of huge trading losses at JPMorgan Chase & Co. JPMorgan said it lost at least $2 billion from a failed hedging strategy. The Dow component was down 7.3 percent at $37.76 and weighed on the entire sector. Nvidia Corp rose 8.3 percent to $13.45 after reporting adjusted first-quarter earnings that beat expectations. The stock boosted the Nasdaq and was the S&P 500's top percentage gainer. U.S. consumer sentiment rose to its highest in more than four years in early May as Americans remained upbeat about the job market. The survey was a welcome sign amid worries that the economic recovery may be slowing down. "It sort of runs against expectations," said Sean Incremona, an economist at 4Cast in New York. "We were looking for a bit of a pullback here but consumers appear to be happy." Still, the S&P 500 was on track for its second weekly decline, although investors were encouraged after the index has rebounded from 2-month lows hit on Wednesday and looks set to close once again above April lows. Marc Pado, a U.S. market strategist at DowBull.com in San Francisco, said traders had helped the market bounce by closing short positions - bets that stocks will fall - after gains at the start of May. "The trader types see that we came down to that 1,340 area on the S&P 500, started to bounce, started to see some buying, some bottom fishing, then you got that consumer sentiment number and that was compelling enough," he said, The Dow Jones industrial average was up 5.41 points, or 0.04 percent, at 12,860.45. The Standard & Poor's 500 Index was up 1.30 points, or 0.10 percent, at 1,359.29. The Nasdaq Composite Index was up 15.16 points, or 0.52 percent, at 2,948.80. JPMorgan estimates the business unit involved in the trading loss will lose $800 million in the current quarter, excluding private equity results and litigation expenses. The bank had previously expected the unit to earn a profit of about $200 million. Jamie Dimon, the chief executive of the biggest U.S. bank by assets, cautioned that losses could grow by another $1 billion, another hurdle for a sector already besieged by the sovereign debt crisis in Europe and fears of slowing growth globally. JP Morgan's news weighed on bank shares as investors feared both a greater risk of more regulation and the potential for more such losses at other banks. However, the stocks were off their lows of the morning. Citigroup Inc lost 3.2 percent to $29.67 and the Financial Select Sector SPDR was off 0.4 percent to $14.72. The S&P financial sector fell 0.5 percent, extending its month-to-date losses to 3.4 percent. "There is no investment bank in the country that is more respected and viewed as more capable of dealing with risk management than JP Morgan," said Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire. "This makes it clear that derivatives are risky for anybody to run and we have to be more careful with exposing the system to the risk of derivatives," he said. Financial stocks have been among the most volatile in recent months as investors question what the growth outlook for the United States and the debt crisis of Europe will mean for the group's profits. JPMorgan has fallen 12.2 percent this month. The CBOE VIX Volatility Index is up 9 percent this month in a sign of growing caution, although it eased somewhat on Friday. Thomson Reuters/University of Michigan's preliminary consumer confidence index for May improved to 77.8 from 76.4 in April, topping forecasts of 76.2. Of the 453 companies in the S&P 500 that have reported earnings to date for Q1 2012, 66.2 percent have reported earnings above analyst expectations, according to Thomson Reuters data. That compares with more than 80 percent at the start of earnings season and is below the average for the past 4 quarters of 68 percent. Shares of Arena Pharmaceuticals Inc rose 64.5 percent to $6.01 after a panel of experts recommended approval of the company's obesity pill, a big step toward making it the first new diet drug on the U.S. market in more than a decade. The stock was the most actively traded on the Nasdaq composite.