(Updates to mid-afternoon trading)

* Indexes up: Dow 0.65%, S&P 500 0.50%, Nasdaq 0.57%

* S&P 500 breaks back above 100-day, 200-day moving

averages

* PCE, GDP data show inline inflation,

weaker-than-expected growth

* Amazon ( AMZN ) shares rise after CEO reveals AI services

revenue

* Constellation Brands ( STZ ) jumps after smaller drop in Q4

sales

By Stephen Culp and Avinash P

NEW YORK, April 9 (Reuters) - U.S. stocks advanced on

Thursday, as signs of ongoing negotiations toward a peaceful

resolution to the six-week Middle East conflict helped ease

worries over the fragile U.S.-Iran truce.

All three major U.S. stock indexes were higher, having rebounded

from an earlier dip as Israel sought talks with Lebanon.

"The market is still very geopolitically driven, very

headline driven at this point," said Paul Nolte, senior wealth

adviser and market strategist at Murphy & Sylvest in Elmhurst,

Illinois. "The narrative changes by the day, if not the hour."

"The news that Israel and Lebanon are talking and could

agree to a ceasefire is great," Nolte added. "That's moved the

markets."

In two sessions, the S&P 500 has moved back above its

100-day and 200-day moving averages, two key technical levels.

Crude prices seesawed throughout the session as

markets waited for Iran to reopen the Strait of Hormuz, through

which one-fifth of the world's oil is shipped.

The CBOE Market Volatility Index, called the "fear

index," dipped to its lowest point since the onset of the war.

The Commerce Department issued its GDP and PCE reports, which

showed the economy grew at a slower-than-expected pace in the

fourth quarter, while consumer prices remain elevated.

Minutes from the U.S. Federal Reserve's most recent monetary

meeting showed policymakers are increasingly eyeing potential

interest rate hikes to counter the inflationary impact of a

prolonged Iran war.

The Dow Jones Industrial Average rose 311.32 points,

or 0.65%, to 48,221.24, the S&P 500 gained 34.37 points,

or 0.50%, to 6,816.78 and the Nasdaq Composite added

128.09 points, or 0.57%, to 22,763.08.

ENERGY SECTOR DROPS MOST

Of the 11 major sectors in the S&P 500, energy

shares were down the most, while consumer discretionary

registered the biggest percentage gain.

Consumer discretionary stocks got a boost after Amazon.com's ( AMZN )

CEO Andy Jassy said its artificial intelligence

services at its cloud-computing unit are generating annualized

revenue of more than $15 billion. Amazon's ( AMZN ) shares were up 4.6%.

Software stocks were clear underperformers on the

day, sliding 2.8%, while retail and chips

outperformed, rising 3.4% and 1.4%, respectively.

Constellation Brands ( STZ ) jumped 7.4% after the company

posted a smaller-than-expected drop in fourth-quarter sales.

Applied Digital ( APLD ) shares dropped 5.4% after the data

center operator's third-quarter net loss widened from a year

earlier.

Advancing issues outnumbered decliners by a 2.01-to-1 ratio

on the NYSE. There were 211 new highs and 73 new lows on the

NYSE.

On the Nasdaq, 2,649 stocks rose and 1,971 fell as advancing

issues outnumbered decliners by a 1.34-to-1 ratio.

The S&P 500 posted 43 new 52-week highs and 19 new lows

while the Nasdaq Composite recorded 142 new highs and 125 new

lows.