* Walmart gains after Q2 comp sales beat
* Cisco tumbles after forecast disappoints
* U.S. retail sales surge in July in boost to economy
* Futures up: Dow 0.42%, S&P 0.41%, Nasdaq 0.40% (Adds comment, updates prices)
By Amy Caren Daniel
Aug 15 (Reuters) - U.S. stock index futures rose in volatile trading on Thursday, as strong July retail sales data and Walmart's upbeat results eased some concerns about the economy slipping into recession, while mixed reports on the trade dispute kept investors on edge.
The bounce in shares comes after the blue-chip Dow index posted its worst day this year, as recession fears gripped the market after the U.S. Treasury yield curve inverted for the first time in 12 years.
Sentiment got a boost after the Commerce Department said retail sales rose 0.7% in July, much higher than the expectations of a 0.3% rise, as consumers bought a range of goods even as they cut back on motor vehicle purchases.
"The July number shows that the weakest economic data that people keep pointing out to for a global slowdown is coming from outside the U.S. not inside the U.S.," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin.
Futures initially dived after China's finance ministry said on Thursday it would take necessary counter-measures against the latest tariffs on $300 billion of Chinese goods.
However in a separate statement, a Chinese foreign ministry spokeswoman said, "We hope the U.S. will meet China halfway, and implement the consensus of the two heads of the two countries in Osaka," drove a turnaround in shares.
"It doesn't matter where we are right now. The number of variables affecting this market are increasing," said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.
Walmart Inc shares rose 6.8% after the retailer reported second-quarter U.S. comparable sales that beat estimates and boosted its earnings forecast for the year.
In contrast, Dow component Cisco Systems Inc dropped 7.5% after the Dow component blamed the bruising trade war for poor quarterly forecasts.
The network gearmaker said prices of some items sold by the retailer have climbed due to tariffs on Chinese imports, but it is managing that pressure by negotiating with suppliers and sourcing from alternate supply bases.
At 8:43 a.m. ET, Dow e-minis were up 108 points, or 0.42%. S&P 500 e-minis were up 11.75 points, or 0.41% and Nasdaq 100 e-minis were up 30.25 points, or 0.4%.
Trade worries have plagued financial markets for at least a year fuelling fears of recession, and traders have raised their bets on three rate cuts this year including one in September to sustain a decade-long bull market run on Wall Street.
The benchmark S&P 500 is now 6.6% away from its all-time high hit in July. (Reporting by Amy Caren Daniel and Arjun Panchadar in Bengaluru)