Wall Street rallies on Bernanke comments

NEW YORK (Reuters) - Stocks rose on Monday, with all 10 S&P sectors trading higher, after Federal Reserve Chairman Ben Bernanke suggested the U.S. central bank would continue supportive monetary policies even as the unemployment rate improves.

Major stock indexes, rebounding from last week's decline, were up more than 1 percent.

Bernanke said the U.S. economy needed to grow more quickly if it is to produce enough jobs to bring down the unemployment rate further.

"Further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies," Bernanke told a gathering of the National Association for Business Economics.

Analysts said Bernanke's comments reinforced investors' perception that the Fed's policy would remain accommodative and possibly include further quantitative easing, or QE3.

"We are clearly addicted to this highly liquid market, and Bernanke has reassured that it stay up this way. The market likes these kind of reassurances," said Kent Engelke, chief economic strategist at Capitol Securities Management.

"The risk trade is definitely on and money is moving out of Treasuries and into risky assets."

The Dow Jones industrial average was up 127.18 points, or 0.97 percent, at 13,207.91. The Standard & Poor's 500 Index was up 13.59 points, or 0.97 percent, at 1,410.70. The Nasdaq Composite Index was up 37.79 points, or 1.23 percent, at 3,105.71.

The S&P index fell 0.5 percent last week, a relatively minor decline that was still the biggest weekly slide since the final week of December.

Improving sentiment about the pace of economic growth has kept investors piling into equities. The S&P 500 is near its highest point since May 2008, and the Nasdaq has risen for six straight weeks.

Also supporting the market was a euro zone factor, with Germany signaling for the first time on Monday its willingness to increase the resources available for tackling the euro zone debt crisis.

On the U.S. economic front, pending home sales slid 0.5 percent in February, according to the National Association of Realtors, confounding expectations for a rise of 1 percent. Equities were little impacted by the data, though homebuilder D.R. Horton Inc fell 0.6 percent to $15.33.

Lions Gate Entertainment Corp rallied 3 percent to $14.98 after the strong opening to its film "The Hunger Games," which made $214 million over the weekend globally.

Cal-Maine Foods Inc reported third-quarter earnings that fell from the prior year on rising feed costs, which the company sees persisting through the summer. Shares fell 6.7 percent $39.16.

BATS Global Markets Inc on Sunday apologized for a system failure that caused shares in its own initial public offering to erroneously trade for less than a penny on Friday and resulted in Apple Inc's shares being temporarily halted.

BATS Chief Executive Joe Ratterman called the incident a "devastating moment," and said the company's withdrawn IPO was on hold "for the foreseeable future.

(Editing by Chizu Nomiyama)