* July U.S. producer prices rise; industrial output up
* Energy stocks decline
* J.C. Penney, Nordstrom rise after strong results
* Indexes: Dow up 0.3 pct, S&P up 0.3 pct, Nasdaq up 0.2 pct (Updates to late afternoon)
By Caroline Valetkevitch
Aug 14 (Reuters) - U.S. stocks inched higher on Friday afternoon after upbeat economic data and gains in retailer shares, though a decline in energy shares limited the move up.
J.C. Penney and Nordstrom both rose after the department store chains posted better-than-expected quarterly results. J.C. Penney was up 5.1 percent at $8.48 while Nordstrom jumped 3.7 percent to $77.72 and was among the biggest percentage gainers in the S&P 500, while the S&P retail index was up 0.4 percent.
Energy shares dipped in afternoon trade and the energy index was the only S&P 500 index in negative territory for the day. Still, the energy index was on track for a gain of 3.2 percent for the week, its biggest since March.
U.S. producer prices rose for a third straight month in July, suggesting the drag on inflation from weaker oil prices was easing, while industrial output advanced at its strongest pace in eight months.
The data followed optimistic employment and retail sales data for July, which overall suggested the third quarter was off to a healthy start.
The positive data comes at the end of a choppy week during which China devalued its currency, hitting markets and derailing predictions of a Federal Reserve interest rate hike.
"The market is still caught in a trading range. We're through eight months of the year and the market has gone nowhere," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
"I think the bulls are nervous and bears are hoping for a big market decline once the Fed does finally hike rates."
At 2:44 p.m., the Dow Jones industrial average rose 52.78 points, or 0.3 percent, to 17,461.03, the S&P 500 gained 6.2 points, or 0.3 percent, to 2,089.59 and the Nasdaq Composite added 9.92 points, or 0.2 percent, to 5,043.48.
Most traders and economists are expecting a September rate hike, but macro concerns have prompted some to argue that the Fed may wait until December to raise rates.
Restaurant operator El Pollo Loco fell 19.4 percent to $14.79, below its IPO price, after weak quarterly results.
Sysco rose 6.6 percent to $41.04 after Nelson Peltz reported a 7 percent stake in food distributor and said he would seek representation on the company's board.
Advancing issues outnumbered declining ones on the NYSE by 1,912 to 1,099, for a 1.74-to-1 ratio on the upside; on the Nasdaq, 1,582 issues rose and 1,180 fell for a 1.34-to-1 ratio favoring advancers.
The benchmark S&P 500 index was posting 20 new 52-week highs and 11 new lows; the Nasdaq Composite was recording 49 new highs and 96 new lows. (Additional reporting by Tanya Agrawal in Bengaluru; Editing by Savio D'Souza and Meredith Mazzilli)