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* Trump-Xi meeting at G20 eyed
* Banks rise on clearing Fed's final stress test
* Apple dips as design chief to leave
* Moderate consumer spending, inflation support rate cut
* Indexes up: Dow 0.36%, S&P 0.47%, Nasdaq 0.47% (Updates to early afternoon)
By Shreyashi Sanyal
June 28 (Reuters) - U.S. stocks rose on Friday, as big banks gained after clearing the Federal Reserve's stress test, while investors kept a watch on the G20 summit where a meeting between Presidents Donald Trump and Xi Jinping could lay the groundwork to resolve their trade dispute.
Trump said he hoped for productive talks with the Chinese president, but said he had not made any promises about a reprieve from escalating tariffs. The two leaders are scheduled to meet on the sidelines of the G20 summit this weekend in Japan.
"What investors expect are good talks, no implementation of tariffs right away and a continuation in negotiations. Which is also the most likely outcome from G20," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
"There are still hopes that things won't be worse after the weekend."
The uncertainty caused by conflicting reports on a potential trade truce stalled this month's rally, with the S&P 500 index on pace to post its first weekly loss in June.
Still, the bellwether index is up nearly 7% for the month, putting it on track to clock its best six-month run since March 2012. Global stocks, meanwhile, recorded their best first-half of the year ever.
Lifting Wall Street were gains in financials, up 1.39%, the most among the 11 major S&P sectors, closely followed by a 0.9% rise in trade-sensitive industrials.
Banks stocks jumped 2.41% after the Fed on Thursday approved capital plans of 16 banks, including JPMorgan Chase & Co, Bank of America Corp and Citigroup Inc , in its final stress test hurdle.
At 12:31 p.m. ET the Dow Jones Industrial Average was up 94.21 points, or 0.36%, at 26,620.79 and the S&P 500 was up 13.78 points, or 0.47%, at 2,938.70.
The Nasdaq Composite was up 37.26 points, or 0.47%, at 8,005.02.
Apple Inc dipped 0.3% after the iPhone maker said Jony Ive, a close creative collaborator with the company's co-founder Steve Jobs, will leave later this year.
Constellation Brands Inc jumped 4.5% after the Corona beer maker reported quarterly results above analysts' estimates.
Giving the Fed more ammunition to cut interest rates next month was data that showed consumer spending increased moderately in May and prices rose slightly, pointing to slowing economic growth and benign inflation pressures.
Advancing issues outnumbered decliners by a 3.10-to-1 ratio on the NYSE and by a 2.81-to-1 ratio on the Nasdaq.
The S&P index recorded nine new 52-week highs and no new low, while the Nasdaq recorded 59 new highs and 30 new lows. (Reporting by Shreyashi Sanyal and Amy Caren Daniel in Bengaluru; Editing by Sriraj Kalluvila and Anil D'Silva)