* ECB cuts rates below zero to spur bank lending
* Rite Aid shares slide after outlook
* Sprint agrees to pay about $32 bln for T-Mobile US - source
* Indexes up: Dow 0.5 pct, S&P 0.5 pct, Nasdaq 0.7 pct (Updates prices, changes comment, adds David Tepper)
By Rodrigo Campos
NEW YORK, June 5 (Reuters) - The S&P 500 rose to hit an intraday record high for the seventh time in eight sessions on Thursday after the European Central Bank cut rates to record lows and outlined further accommodative monetary policy actions.
Also helping stocks: hedge fund manager David Tepper was reported by CNBC as saying the ECB move partly "alleviated" his concerns about the market, after having said last month he was worried stock prices were stretched.
The ECB cut the deposit rate to -0.10 percent and will move further to persuade banks to lend. ECB head Mario Draghi said the bank's governing council will intensify preparations related to outright purchases of asset-backed securities.
"A lot of people were short, expecting a pullback coming into the ECB decision," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. "I think people were positioned for things to be underwhelming.
"Things will remain volatile between now and the end of the day ahead of the jobs report tomorrow," he said, adding that Tepper's comments were moving the market in the short term.
Investors are next seen focusing on Friday's U.S. payrolls report for May. It is expected to show job growth likely slowed last month and the unemployment rate probably ticked up, but not by enough to upset the view that the economy is bouncing back.
Supporting the market, the number of Americans filing new claims for unemployment benefits rose last week, but the underlying trend continued to point to a firming labor market.
The Dow Jones industrial average rose 84.21 points or 0.5 percent, to 16,821.74, the S&P 500 gained 9.53 points or 0.49 percent, to 1,937.41 and the Nasdaq Composite added 30.39 points or 0.71 percent, to 4,282.04.
Sprint has agreed to pay about $40 per share to buy T-Mobile US, a person familiar with the matter told Reuters on Wednesday, marking further progress in the attempt to merge the third and fourth-biggest U.S. mobile network operators. Sprint shares fell 2.1 percent to $9.20 while T-Mobile US dropped 1.5 percent to $33.77.
Rite Aid shares slid 8.8 percent to $7.75 after it estimated first-quarter profit much below expectations.
Ciena Corp shares jumped 18.3 percent to $22.47 after the company posted earnings that beat expectations and gave a revenue outlook above forecasts. (Reporting by Rodrigo Campos; Editing by Chizu Nomiyama and Nick Zieminski)