* Yellen expects Fed to hike rates later this year
* Bank stocks gain; health stock fall again
* Q2 GDP revised upwards, backing case for rate hike
* Nike at record high on results; FTC probe hits Google
* Indexes up: Dow 1.2 pct, S&P 0.7 pct, Nasdaq 0.2 pct (Updates to early afternoon)
By Tanya Agrawal
Sept 25 (Reuters) - U.S. stocks were higher in early afternoon trading on Friday after Federal Reserve Chair Janet Yellen said she expects interest rates to be raised this year, easing concerns about slowing global growth and prompting a rally in bank shares.
However, the continuing selloff in health stocks and a drop in Google's shares due to a regulatory investigation limited gains on the Nasdaq.
Nike's strong results in China and data showing the U.S. economy expanded more than estimated in the second quarter added to the positive tone. The data also backed the case for a rate hike before the end of 2015.
Yellen said on Thursday that the Fed does not expect recent global economic and financial market developments to significantly affect its policy.
"Yellen's speech gave a little bit of clarity to the markets," said Robert Pavlik, chief market strategist at Boston Private Wealth in Palm Beach Gardens, Florida.
"That put the market in a slightly better mindset. It understands what the Fed is going to be doing because the last FOMC meeting had left people scratching their heads."
Federal fund futures contracts showed traders were pricing in more than a 50 percent chance of a rate hike by end-2015.
At 12:31 ET (1631 GMT) the Dow Jones industrial average was up 194.19 points, or 1.2 percent, at 16,395.51 and the S&P 500 was up 13.81 points, or 0.71 percent, at 1,946.05.
The Nasdaq composite was up only 8.64 points, or 0.18 percent, at 4,743.12, as biotech stocks fell.
Nine of the 10 major S&P sectors were, led by the financial index's 1.46 percent gain.
The laggard was the health index, down 0.46 percent. The Nasdaq biotech index was down 2.3 percent. Both indexes have sold off for the past five straight days.
Markets have been skittish since last Thursday, when Yellen cited concerns about slowing global growth as a key reason for holding off from a much-anticipated hike. Since then, the S&P had fallen about 3 percent through Thursday's close.
The CBOE Volatility index, known as Wall Street's "fear gauge", fell 4.6 percent to 22.38, but remained above its long-term average of 20.
Data on Friday showed U.S. GDP rose at a 3.9-percent annual pace in the April-June quarter, up from the 3.7-percent pace reported last month. Consumer sentiment fell to 87.2 in September from 91.9 in August, but beat the median forecast of 86.7.
Nike jumped 9.6 percent to a record of $125.82 after its profit topped expectations on strong China growth. The stock gave the biggest boost to the Dow and the S&P.
Bank of America, JPMorgan, Citigroup and Wells Fargo were up between 1.8 percent and 2.6 percent.
Google fell 0.6 percent to $650.76. The U.S. Federal Trade Commission is investigating whether Google is using its Android mobile operating system to stifle competition.
HollyFrontier jumped 4.6 percent to $50.51 on a market rumor of renewed takeover interest by larger rival Tesoro , market sources told Reuters. Tesoro was up 1.5 percent at $101.81.
Advancing issues outnumbered decliners on the NYSE by 1,746 to 1,200. On the Nasdaq, 1,516 issues fell and 1,208 advanced.
The S&P 500 index showed four new 52-week highs and four new lows, while the Nasdaq recorded 38 new highs and 90 new lows. (Reporting by Tanya Agrawal in Bengaluru, additional reporting by Abhiram Nandakumar; Editing by Savio D'Souza)