* SunEdison, 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' acquisition of Allergan 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 (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 , 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 , 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