* Cyprus to spin off Greek units of its battered banks
* S&P 500 on track for second negative week of the year
* Nike shares hit record, Micron at near two-year high
* Dow up 0.5 pct, S&P 500 up 0.5 pct, Nasdaq up 0.5 pct
By Rodrigo Campos
NEW YORK, March 22 U.S. stocks bounced back on Friday as a banking deal between Greece and Cyprus eased concerns about a Cypriot financial meltdown.
A 12 percent jump in Nike shares a day after it posted results boosted the consumer discretionary sector of the S&P 500, which led the benchmark's gains.
Cyprus agreed with Greece on a takeover of the Greek units of Cypriot banks, which ended uncertainty about the fate of those operations.
But Russia rebuffed Cypriot appeals for aid, leaving the island's leaders scrambling to strike a bailout deal with the European Union by next week or face the collapse of its financial system and an exit from the euro that could roil the euro zone.
The FTSEurofirst-300 index of pan-European stocks dipped 0.1 percent, while Wall Street advanced in Friday's session. But the three major U.S. stock indexes were down for the week, with Cyprus weighing on markets since Monday.
The lingering concern among investors is that if Cyprus leaves the euro zone, then maybe other larger countries will follow and debilitate the bloc.
The worry "is the psychological knock-on effect of the credible possibility of some (country) saying 'Cyprus got out, now they are on their own, they devalued their currency, they don't have to go through austerity'," said Art Hogan, managing director at Lazard Capital Markets in New York.
"What is going to stop Greece from doing the same thing? And you start a daisy chain."
The Dow Jones industrial average rose 73.53 points, or 0.51 percent, to 14,495.02. The S&P 500 gained 8.18 points, or 0.53 percent, to 1,553.98. The Nasdaq Composite added 14.50 points or 0.45 percent, to 3,237.10.
The S&P 500 is still on track to post only its second weekly decline so far this year. Although the index was down a modest 0.43 percent at midday, this is also the largest weekly percentage decline since the last week of 2012.
Nike's shares hit an all-time high a day after its quarterly profit beat Wall Street's expectations as margins increased and global future demand for its apparel and shoes rose. Nike topped at $60.23. At midday, the stock rose 11.8 percent to $59.94.
Tiffany & Co reported a slightly higher profit for the quarter that included the holiday season, and said the pace of its worldwide sales growth would pick up this year. Its shares gained 1.7 percent to $69.04.
Micron Technology posted a quarterly net loss on Thursday, but the chipmaker said the outlook for memory chip prices is improving. The stock gained 11.8 percent to $10.14, its highest in almost two years.