US STOCKS-S&P 500 tops 2,000; analysts see more gains ahead

* Biotechs lead S&P above milestone 2,000

* Hope for European stimulus lifts financials

* Data on service sector, housing market below forecasts

* Indexes up: Dow 0.7 pct, S&P 0.7 pct, Nasdaq 0.6 pct (Updates to midday trading, adds context on S&P record)

By Ryan Vlastelica

NEW YORK, Aug 25 (Reuters) - The S&P 500 vaulted above 2,000 for the first time on Monday, with financials and biotechnology stocks lifting the benchmark index to a new record as investors bet on equities as a preferred asset over bonds.

The significance of the milestone was more psychological than fundamental, and it represents the cumulation of a six-year rally that has boosted retirement accounts for Americans from Wall Street to Main Street, though the gains have largely benefited wealthier Americans. On a total-return basis the S&P 500 has more than tripled from its 2009 low hit during the financial crisis.

The day's gains were broad, with all 10 of the S&P 500's primary sectors advancing. About two-thirds of stocks on both the New York Stock Exchange and the Nasdaq were in positive territory.

"The trend continues to be positive and it's like fighting a tsunami, it keeps going and going and going and it won't stop," said Adam Hewison, president and chief executive at INO.com in Annapolis, Maryland.

The advance comes amid a variety of cautious signals for the economy, including tepid U.S. growth, waning stimulus from the Federal Reserve and a simmering conflict between Ukraine and Russia. In the latest economic data, reads on both the U.S. services sector and the housing market came in below forecasts.

"All the world events are negative; people are just shrugging them off," said Hewison. "I think we're going to continue seeing gains."

Biotech stocks, a primary driver of recent equity gains, continued to outperform on Monday, with the Nasdaq Biotech index up 2.4 percent. Roche Holding AG (Other OTC: RHHBF - news) agreed to buy InterMune Inc (NasdaqGS: ITMN - news) for $8.3 billion in cash, the latest vote of confidence in a sector that many, including Federal Reserve Chair Janet Yellen, worry is overvalued.

InterMune jumped 36 percent to $73.00. Gilead Sciences (NasdaqGS: GILD - news) and Regeneron Pharmaceuticals (NasdaqGS: REGN - news) were the S&P 500's top two biggest percentage gainers, both up 2.5 percent.

The Dow Jones industrial average rose 117.81 points or 0.69 percent, to 17,119.03, the S&P 500 gained 12.94 points or 0.65 percent, to 2,001.34 and the Nasdaq Composite added 28.52 points or 0.63 percent, to 4,567.07.

Financial shares were among the strongest of the day, rising on expectations that Europe may see more aggressive monetary stimulus. Morgan Stanley (Xetra: 885836 - news) , which has heavy exposure to Europe, rose 2.5 percent to $34.29 while Goldman Sachs Group Inc , a Dow component, was up almost 2 percent at $178.90.

U.S. stocks have been strong of late. Major indexes closed a third week of gains Friday, with the Dow and S&P enjoying their best weeks since April.

Burger King is in talks to acquire Canadian coffee and doughnut chain Tim Hortons Inc (NYSE: THI - news) in a deal that would be structured as a so-called tax inversion transaction to move Burger King's domicile to Canada, which has lower overall corporate taxes. Shares (Frankfurt: DI6.F - news) of Burger King jumped 17 percent to $31.67 while U.S. shares of Tim Hortons advanced 20 percent to $75.23. (Editing by Bernadette Baum and James Dalgleish)