European shares hit a five-month high on Friday, with a key index set to extend its best weekly winning streak in seven years, on expectations that European policymakers might resolve their differences and work closely to tackle the debt crisis. .EU

Gap (GPS.N) will be in the spotlight after posting higher quarterly profit on Thursday, helped by bright colored jeans and tight inventories, and the clothing retailer also raised its full-year forecast.

The U.S. Federal Reserve may need to raise interest rates sooner than late 2014, despite continued high unemployment, Minneapolis Fed President Narayana Kocherlakota said on Thursday.

Chevron (CVX.N), the No. 2 U.S. oil company, has appealed against an injunction banning it and its drilling contractor Transocean Ltd (RIG.N) from operating in Brazil while civil and criminal charges over an oil spill last November are judged.

An Indiana union pension fund that owns shares in Wal-Mart Stores Inc (WMT.N) has sued the company to gain access to thousands of internal documents related to allegations that a Wal-Mart subsidiary bribed Mexican government officials.

Network storage equipment maker Brocade Communication Systems Inc's (BRCD.O) third-quarter results beat Wall Street estimates, boosted by a 13 percent rise in storage equipment sales, and the company said its chief executive intends to resign.

Technology products distributor ScanSource Inc (SCSC.O) forecast first-quarter profit well below analysts' estimates, mainly on weak sales in Europe, sending its shares down 10 percent in extended trade.

Chipmaker Marvell Technology Group Ltd's (MRVL.O) current-quarter results may miss expectations on faltering growth at its lucrative mobile phone chips business in China and continued slowdown in PC sales.

Weak shipping rates weighed on DryShips Inc's (DRYS.O) quarterly results, taking the shine off a jump in demand at its drilling unit Ocean Rig UDW (ORIG.O) OCRG.NFF.

On the macro front, investors awaited the Thomson Reuters/University of Michigan surveys' August preliminary consumer sentiment index, due at 1355 GMT. Economists in a Reuters survey expect a reading of 72.4 compared with 72.3 in the final July report.

At 1400 GMT, the Conference Board releases its report on July leading economic indicators. Economists in a Reuters survey forecast a 0.2 percent rise compared with a 0.3 percent drop in June.

The S&P 500 closed at its highest level since early April on Thursday after comments from German Chancellor Angela Merkel that appeared to support the European Central Bank's efforts to fight the region's debt crisis. Cisco Systems jumped after it raised its dividend.

The Dow Jones industrial average .DJI gained 0.65 percent, the Standard & Poor's 500 Index .SPX added 0.71 percent and the Nasdaq Composite Index .IXIC gained 1 percent.

(Reporting by Blaise Robinson; Editing by John Stonestreet)

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