U.S. retail sales probably rose about 0.5 percent in July, reversing a small part of declines seen in May and June.

That median forecast was fueled by a 3.5 percent jump in auto unit sales in July and a rebound in gasoline prices. Given that the retail sales report is based on dollar receipts and not volume, an increase in prices can push up the measure of sales.

Weekly chain-store sales reports also indicated retailers may have sold more clothing, furniture and other non-auto or non-gasoline merchandise in July.

However, some analysts think weak earnings growth, a drop in the number of temporary government census workers and the temporary expiration of emergency unemployment benefits took a bigger bite out of consumer activity in July.

Forecasts for core retail sales, which exclude autos, ranged from -0.3 percent to 0.5 percent.

MARKET IMPACT

An as-expected 0.5 percent gain in retail sales could boost stocks by helping to dispel fears the economy is at risk of grinding to a halt, while a drop in sales would likely reinforce concerns and push the market lower.

A positive report could weigh on bond prices, which have begun to build in expectations of further monetary easing by the Federal Reserve.

An above-consensus reading could help lift the slumping dollar, while weaker-than-expected data would likely see the dollar resume its slide.

ANALYST COMMENTS

* CAPITAL ECONOMICS

"We have penciled in a 0.3 percent month-on-month gain. Overall sales may therefore rise by around 0.6 percent. This would reverse only a small part of the declines seen in May and June. Nonetheless, in the current environment any increase in sales would be received well."

* IHS GLOBAL INSIGHT

"Auto sales rose modestly after a poor showing in June. Building material store sales probably fell again. Other major retail sales channels are expected to exhibit modest growth. After adjusting for seasonality, gasoline prices rose in July and should push up sales at gasoline stations."

* IFR MARKETS (a Thomson Reuters Division)

"A bit stronger auto sales should keep headline retail sales treading water, up just 0.2 percent and likely flat in real terms, while ex-autos sales should tick downward about 0.1 percent."

* ROYAL BANK OF SCOTLAND

"Despite continued concerns about a collapse in consumer spending, retail sales in July may have increased by about 0.5 percent. The headline figure was probably boosted by the 3.5 percent jump in unit auto sales last month, which could have led to a rise in auto dealers' receipts."

(Polling by Bangalore Unit; reporting by Doug Palmer; editing by Jeffrey Benkoe)