US STOCKS-S&P 500 hits record as Actavis rallies

* SunEdison (NYSE: SUNE - news) , TerraForm rally on entrance to U.S. wind power market

* German analyst and investor sentiment up in November

* U.S. producer inflation up but underlying trend muted

* Indexes up: Dow 0.2 pct, S&P 0.4 pct, Nasdaq 0.6 pct (Updates prices)

By Rodrigo Campos

NEW YORK, Nov 18 (Reuters) - U.S. stocks rose on Tuesday, lifting the S&P 500 to a record high, boosted by healthcare after Actavis (NYSE: ACT - news) ' acquisition of Allergan (NYSE: AGN - news) triggered bullish analyst notes.

Further support for equities came from U.S. producer prices that kept intact a trend of benign inflation and from higher homebuilder sentiment in November, while German analyst and investor sentiment advanced this month for the first time in almost a year.

Allergan on Monday accepted a $66 billion takeover bid from Actavis Plc in cash and stock. At least two analysts raised Actavis' price target, one to as high as $300. Actavis shares rose 6.6 percent Tuesday to $264.38 as the top percentage gainer on the S&P 500.

"There is more space for M&A. Companies are looking for areas to have growth," said Bruce Zaro, chief technical strategist at Bolton Global Asset Management in Boston.

"Healthcare stocks are doing well, but not as a defensive play, and it is a positive that stock prices are strong and stocks are being used as currency," he said.

At 12:03 p.m. EST (Other OTC: ECPCY - news) (1703 GMT) the Dow Jones industrial average rose 37.47 points, or 0.21 percent, to 17,685.22, the S&P 500 gained 8.49 points, or 0.42 percent, to 2,049.81 and the Nasdaq Composite added 26.53 points, or 0.57 percent, to 4,697.53.

The S&P 500 hit yet another record high, topping at 2,050.65.

The largest decliner on the S&P was Urban Outfitters (NasdaqGS: URBN - news) , down 9.1 percent the day after posting earnings.

Solar company SunEdison rose 24.4 percent to $20.67 as it announced that, together with its unit TerraForm Power (NasdaqGS: TERP - news) , it would buy First Wind for $2.4 billion to enter the U.S. wind power market. TerraForm shares jumped 34 percent to $34.63.

Chinese solar company JA Solar Holdings reported its fourth straight quarterly profit, sending its shares to $8.21, up 5.3 percent.

Advancing issues outnumbered declining ones on the NYSE by 1,941 to 1,031, for a 1.88-to-1 ratio on the upside; on the Nasdaq, 1,624 issues rose and 987 fell for a 1.65-to-1 ratio.

The S&P 500 was posting 61 new 52-week highs and 1 new low; the Nasdaq Composite was recording 76 new highs and 42 new lows.

(Reporting by Rodrigo Campos; Editing by Nick Zieminski)