* Foreclosure issue sinks banks for second straight day
* Google jumps after revenues blow past estimates
* Bernanke's speech points to more easing
* Dow off 0.3 pct, S&P up 0.1 pct, Nasdaq up 1 pct (Updates to afternoon trading)
By Ryan Vlastelica
NEW YORK, Oct 15 (Reuters) - A blowout quarter from Google pushed the Nasdaq up 1 percent on Friday, while the Dow fell as bank shares once again sank on concerns about the widening foreclosure crisis.
The S&P was flat following the most heavily traded morning for the index in at least a month as investors digested mixed results from conglomerate GE and comments from Federal Reserve chairman Ben Bernanke that pointed to more monetary easing.
Financial shares declined on worries the foreclosure quagmire could not only affect bank profits, but spread to credit markets and the overall economy.
"The real downside potential of this issue is unknowable. It could be a multibillion-dollar problem," said Brian Battle, vice president of trading at the Chicago-based Performance Trust Capital Partners. "This could end up being a problem with the financial system like we saw in 2008."
The KBW bank index dropped 2 percent, falling for the third straight day. JP Morgan Chase & Co slid 3.3 percent to $37.45, while Bank of America Corp hit a new 52-week low of $11.74 before retracing some of that loss to trade at $12.02, off 4.6 percent. Trading volume in both Dow components eclipsed their 50-day averages.
Google Inc boosted the Nasdaq, surging 11.1 percent to $600.70 a day after reported third-quarter revenue that soared above expectations. The AMEX Interactive Week Internet Index gained 1.6 percent.
"Google is one of the companies that, no matter what, it can get things done," Battle said. "But investors need broad-based evidence that we're seeing growth. And we didn't get that from GE."
General Electric Co fell 5.1 percent to $16.29 after revenues came in below estimates, even as profits from continuing operations increased for the second straight quarter and its GE Capital unit recorded a stronger performance.
The Dow Jones industrial average slipped 37.35 points, or 0.34 percent, to 11,057.22. The Standard & Poor's 500 Index inched up 0.77 of a point, or 0.07 percent, to 1,174.58. The Nasdaq Composite Index gained 24.41 points, or 1.00 percent, to 2,459.79.
The weakness in GE and financials erased initial gains that came after Bernanke said high unemployment and low inflation pointed to a need for further monetary easing. He said policymakers were still deciding how aggressive they should be.
Markets have advanced in recent weeks, with the S&P 500 up 11.9 percent since Sept. 1. The expectation for further accommodative policies from the Fed has helped feed the rally.
Both Mattel Inc and Gannett Co Inc tumbled after their quarterly revenues missed expectations. Mattel dropped 7.7 percent to $22.15, while Gannett slumped 8.3 percent to $12.92.
Charles Schwab Corp rose 2.1 percent to $14.39 after its quarterly profit topped estimates.
On the economic front, the overall Consumer Price Index edged up 0.1 percent in September, while retail sales rose more than expected. Separately, an early reading on October consumer sentiment unexpectedly weakened, according to a Thomson Reuters/University of Michigan survey. (Reporting by Ryan Vlastelica; Editing by Jan Paschal)