* IBM shares fall after results, Netflix rallies
* ECB set to announce bond purchases: source
* Crude oil rises but still sharply down for week
* Indexes up: Dow 0.3 pct, S&P 0.7 pct, Nasdaq 0.7 pct (Updates to afternoon trading)
By Ryan Vlastelica
NEW YORK, Jan 21 (Reuters) - U.S. stocks rose in a volatile session on Wednesday on reports that new stimulative measures would be announced by the European Central Bank at its meeting tomorrow, though a tepid outlook from IBM limited the Dow's gains.
Market participants have been looking for more aggressive measures from central banks to combat the risk of deflation that has grown alongside a drop in oil prices. A source told Reuters that the ECB's Executive Board has proposed a quantitative easing program that would see the ECB buy roughly 50 billion euros ($58 billion) in bonds per month, starting in March.
"The timing and duration of bond purchases is just as important as the actual amount, if not more important," said Clem Miller, portfolio manager of Wilmington International Funds in Baltimore.
"There are also a lot of questions about asset distribution, since the market is expecting a lot of government bond purchases, and it would be disappointed if it was more slanted to corporate bonds."
The day's gains were broad, with nine of the 10 primary S&P 500 sectors higher on the day. Energy shares were the day's biggest outperformers, up 1.6 percent alongside a 2.8 percent surge in the price of crude oil. Despite the gain, crude remains lower for the week after a drop of nearly 5 percent on Tuesday. Occidental Petroleum rose 1.4 percent to $79.14 on Wednesday.
International Business Machines Corp fell 3.5 percent to $151.50 after reporting lower-than-expected revenues and giving a 2015 profit target that was below estimates. The stock was among the biggest decliners on the S&P 500.
While IBM limited the Dow's advance, the blue-chip index was lifted by UnitedHealth Group Inc, which rose 2.6 percent to $108.40 after its fourth-quarter earnings topped expectations.
Netflix Inc jumped 17 percent to $408.77 a day after the streaming and rental video company posted earnings that were above expectations and said it was growing faster overseas than previously expected.
With 11 percent of S&P 500 companies reporting earnings, 77 percent have topped expectations, according to Thomson Reuters data, above the long-term average of 63 percent. About 55 percent beat on revenue this quarter, below the historical average of 61 percent.
At 12:18 p.m. (1718 GMT) the Dow Jones industrial average rose 53.4 points, or 0.3 percent, to 17,568.63, the S&P 500 gained 13.28 points, or 0.66 percent, to 2,035.83 and the Nasdaq Composite added 30.73 points, or 0.66 percent, to 4,685.58.
Advancing issues outnumbered declining ones on the NYSE by 2,010 to 951, for a 2.11-to-1 ratio; on the Nasdaq, 1,383 issues rose and 1,255 fell for a 1.10-to-1 ratio favoring advancers.
The S&P 500 was posting 34 new 52-week highs and 9 new lows; the Nasdaq Composite was recording 35 new highs and 73 new lows. (Editing by Nick Zieminski)