* Consumer sentiment data better than expected
* GE rises after Q3 results
* Grainger, Honeywell fall after results
* Sept industrial production in line with view
* Twitter rises after Ballmer discloses 4 pct stake
* Dow up 0.4 pct, S&P up 0.5 pct, Nasdaq up 0.3 pct (Updates close with sector moves, new high in McDonald's shares)
By Caroline Valetkevitch
Oct 16 (Reuters) - U.S. stocks ended higher on Friday, notching a third week of gains, lifted by a jump in General Electric shares and upbeat consumer sentiment data.
The S&P 500's three weeks of gains marked its longest winning streak since May and extended a rebound from the market's August selloff.
GE shares rose 3.4 percent to $29.98, hitting their highest level in seven years, after the company reported better-than-expected earnings. The stock was among the biggest boosts to the S&P 500 and Dow.
Mattel jumped 6 percent to $23.89 and was the biggest percentage gainer in the S&P 500, even after its sales missed estimates.
Consumer sentiment data helped. The University of Michigan's preliminary index on consumer sentiment rebounded strongly in early October, suggesting that the economic recovery remained on track.
"We're in a window right now of roughly between 2,000 and 2,050 (for the S&P) that is fairly important for the market. That's the point at which the market broke down in August. If we can hold above 2,000, that would be a good thing," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
He added: "We're in the better part of the year from a seasonal perspective. Certainly with the selloff that we've had in the third quarter, it sets up for potentially a good fourth quarter."
The Dow Jones industrial average rose 74.22 points, or 0.43 percent, to 17,215.97, the S&P 500 gained 9.25 points, or 0.46 percent, to 2,033.11 and the Nasdaq Composite added 16.59 points, or 0.34 percent, to 4,886.69.
For the week, the Dow rose 0.8 percent and the Nasdaq gained 1.2 percent, both also registering a third week of gains, while the S&P 500 was up 0.9 percent.
Forecasts for S&P 500 earnings improved slightly as more companies reported results. Third-quarter earnings are now expected to have fallen 3.9 percent, compared with Monday's forecast for a decline of 4.8 percent, according to Thomson Reuters data.
S&P consumer staples, up 1 percent, and discretionaries, up 0.6 percent, were among the top-performing sectors along with health care, also up 1 percent. Shares of McDonald's rose 1.1 percent to $104.82, a record closing high.
On the down side, Honeywell fell 1.5 percent to $97.03 even though it also beat profit estimates. Industrial tool maker Grainger slumped 6.3 percent to $207.65 after results.
Other domestic data on Friday showed a lackluster industrial production picture, with industrial production in September shrinking for the second month in a row, in line with expectations.
The Federal Reserve, which kept rates at near-zero levels at its September meeting, is waiting for signs of stabilizing inflation and sustained economic recovery before it pulls the trigger on a rate hike.
Twitter rose 4.8 percent to $31.15 after Bloomberg reported that former Microsoft Chief Executive Steve Ballmer owns a 4 percent stake in the company.
Advancing issues outnumbered declining ones on the NYSE by 1,829 to 1,225, for a 1.49-to-1 ratio on the upside; on the Nasdaq, 1,428 issues fell and 1,330 advanced for a 1.07-to-1 ratio favoring decliners.
The S&P 500 posted 21 new 52-week highs and 4 new lows; the Nasdaq recorded 56 new highs and 25 new lows.
About 6.6 billion shares changed hands on U.S. exchanges, compared with the 7.5 billion daily average for the past 20 trading days, according to Thomson Reuters data. (Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Meredith Mazzilli and Diane Craft)