US STOCKS-Wall St rises despite Iraq air strikes; indexes off for week

* Benchmark Treasury yield at 14-month low

* Tekmira jumps as FDA modifies Ebola treatment status

* Indexes up: Dow 0.5 pct, S&P 0.5 pct, Nasdaq 0.3 pct (Updates prices, changes comment)

By Rodrigo Campos

NEW YORK, Aug 8 (Reuters) - U.S. stocks rose on Friday, with high dividend-paying utility stocks leading gains and benchmark Treasury yields at a 14-month low, even as U.S. air strikes in Iraq added to a string of geopolitical uncertainties.

The rise of an eastern Ukraine native as leader of separatists in their stronghold of Donetsk on Thursday and a report that Russia was aiming to de-escalate the conflict in Ukraine helped spark the rebound after futures tumbled overnight, market participants said.

U.S. warplanes struck Iraq Friday for the first time since American troops pulled out in 2011, attacking Islamic militants after President Barack Obama said Washington must act to prevent a potential "genocide" of besieged minorities.

Markets had been on tenterhooks recently, with the S&P 500 set to close a second week of losses, after Russia banned the import of Western foods in retaliation for sanctions over Moscow's support of Ukrainian separatists.

"We've had a nice correction, you have the 'buy the dip' people coming in, but it remains to be seen whether this is the start of a more severe correction or another buying opportunity," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"Technically you would think 1,900 (on the S&P 500 futures)would be a normal bounce point and we came right down to it overnight. So far this is nothing more than a bounce based on news flow, which has been driving the market for the past weeks."

The Dow Jones industrial average rose 76.49 points or 0.47 percent, to 16,444.76, the S&P 500 gained 8.72 points or 0.46 percent, to 1,918.29 and the Nasdaq Composite added 13.61 points or 0.31 percent, to 4,348.58.

The utilities sector was the best performer in the S&P 500 with a 1.3 percent advance. The sector's dividend yield stands at 3.876 percent, more than 100 basis points above the 10-year Treasury yield. Earlier this week, the index flirted with correction territory as it lost nearly 10 percent from a high set June 30.

A global gauge of equities was negative earlier in the day but pared sharp losses, and safe-haven spot gold dipped after earlier hitting a three-week high. The yield in the 10-year Treasury note dipped below 2.35 percent for the first time since June 2013 before trading at 2.3897 - still a 14-month low.

U.S.-traded shares of Canada's Tekmira Pharmaceuticals (NasdaqCM: TKMR - news) jumped 34 percent to $19.20. The U.S. Food and Drug Administration modified its clinical hold status on Tekmira's experimental Ebola treatment to enable its potential use for infected people. The Ebola epidemic now constitutes an international health risk, the World Health Organization said.

Zynga (NasdaqGS: ZNGA - news) shares fell 7.5 percent to $2.70 after it cut its 2014 forecast and said it had delayed several games including a revamped version of "Zynga Poker."

Nvidia Corp shares jumped 7 percent to $18.68 after the graphics chipmaker posted higher fiscal second-quarter earnings and gave a forecast for current-quarter revenue that exceeded Wall Street's estimates. (Editing by Bernadette Baum and Nick Zieminski)