(Refiles to remove extraneous word "Tuesday" in first paragraph)
* Biotech index up more than 2 pct
* U.S. producer inflation up but underlying trend muted
* Indexes up: Dow 0.4 pct, S&P 0.7 pct, Nasdaq 0.8 pct
By Caroline Valetkevitch
NEW YORK, Nov 18 (Reuters) - U.S. stocks climbed in afternoon trading on Tuesday, lifting both the Dow and S&P 500 to record highs as healthcare shares extended this week's gains.
Actavis Plc, Gilead Sciences, Celgene and other biotech names were among the S&P 500's biggest drivers, a day after Allergan agreed to be bought by Actavis. The Nasdaq biotech index was up 2.1 percent, adding to Monday's 0.3 percent gain.
The S&P health care index was up 1.6 percent, while shares of Actavis were up 8.3 percent, Gilead's rose 3.3 percent and shares of Celgene were up 2.4 percent. Helping Actavis were bullish analyst notes.
"A little bit of a risk trade is coming back on, and those are the areas for the M&A," said Uri Landesman, president of Platinum Partners in New York. "It's a very, very good environment to buy growth, so I don't quibble with the notion that there's going to be more M&A."
Among the biggest boosts for the Dow, shares of UnitedHealth were up 2 percent.
Further support for equities came from U.S. producer prices that kept intact a trend of benign inflation.
At 2:55 p.m., the Dow Jones industrial average rose 73.3 points, or 0.42 percent, to 17,721.05, the S&P 500 gained 13.48 points, or 0.66 percent, to 2,054.8 and the Nasdaq Composite added 35.50 points, or 0.76 percent, to 4,706.50.
The S&P 500 rose hit an intraday record at 2,055.84 while the Dow hit a record at 17,732.62, and both were on track to post record closes as well.
The largest percentage decliner on the S&P 500 was Urban Outfitters, down 7.1 percent, a day after reporting results.
On the Nasdaq 100 the largest gainer was Illumina, which rose 4.6 percent, while the largest decliner was Yahoo , down 1.4 percent.
Advancing issues outnumbered declining ones on the NYSE by 1,988 to 1,055, for a 1.88-to-1 ratio; on the Nasdaq, 1,688 issues rose and 1,020 fell for a 1.65-to-1 ratio.
The benchmark S&P 500 index was posting 77 new 52-week highs and one new lows; the Nasdaq Composite was recording 89 new highs and 47 new lows. (Editing by Nick Zieminski)