* Ceasefire declared in Gaza conflict
* Lenders fail to reach deal for Greece
* Investors remain wary of "fiscal cliff" impact
* Dow up 0.4 pct; S&P 500 up 0.2 pct; Nasdaq up 0.4 pct
By Angela Moon
NEW YORK, Nov 21 (Reuters) - U.S. stocks rose on Wednesday after a ceasefire was declared to end the flare-up in violence between Israel and the Palestinians, though the lack of a deal to release emergency aid for Greece limited the market's advance.
Investors also remained anxious about the mandatory tax increases and spending cuts that would go into effect in the new year if a deal is not reached to prevent it - known as the "fiscal cliff" - though policymakers are not expected to get back to negotiations until after Thursday's Thanksgiving holiday.
Trading volume was light ahead of the holiday on Thursday, when the U.S. stock market will be closed. With less than an hour left to trade until the closing bell, about 3.6 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with year-to-date daily average volume of 6.5 billion shares. On Friday, the U.S. stock market will close early at 1 p.m. (1800 GMT).
"Usually on patriotic holidays, which I think Thanksgiving is one, we often see a rally on a light volume. So I wouldn't be surprised if we see that on Friday, if there is no major news," said J.J. Kinahan, chief derivatives strategist at TD Ameritrade in Chicago.
"So far this week, we have heard good news in terms of (the) fiscal cliff. Both sides seem to be playing nice, but we will start to see big day-to-day swings (in the market) from next week, when we get more details."
Greece's international lenders failed again to reach a deal to release emergency aid to the debt-saddled country. Lenders will try again next Monday, but Germany signaled that significant divisions remain.
A truce between Israel and Hamas gave stocks some support around midday after Egypt announced a ceasefire will come into effect later in the day.
Fears that the fiscal cliff discussions in Washington could be drawn out or yield no resolution have been at the forefront of investors' minds in recent weeks. Combined with concerns over the euro zone's continued debt problems, the worries had driven a sell-off that has taken more than 5 percent off the S&P 500 since Election Day in early November.
Positive comments from U.S. politicians that they will work to find common ground have helped the S&P 500 recoup some of that loss in recent sessions.
The Dow Jones industrial average gained 49.60 points, or 0.39 percent, to 12,838.11. The Standard & Poor's 500 Index added 2.64 points, or 0.19 percent, to 1,390.45. The Nasdaq Composite Index rose 10.10 points, or 0.35 percent, to 2,926.78.
St Jude Medical shares tumbled 12.1 percent to $31.38 after an inspection report from health regulators raised new safety concerns about one of the company's leads that are used with implantable defibrillators, analysts said.
A small gain in International Business Machines helped the Dow outperform the other indexes. IBM was up 0.8 percent at $190.73.
Salesforce.com Inc jumped 8.4 percent to $158.20 after the business software provider beat Wall Street's expectations for the third quarter and maintained its outlook for the rest of the year.
But Deere & Co dragged on the S&P 500 after the world's largest farm equipment maker reported a weaker-than-expected quarterly profit. Its stock lost 3.7 percent to $82.78.
The market did not derive much direction from the day's economic data, with initial jobless claims falling last week, as expected.
Other data showed manufacturing picked up at its quickest pace in five months in November, while consumer sentiment improved only slightly.
The focus will likely turn to retailers on Friday as analysts try to assess how strong the holiday shopping season will be this year, according to Kurt Brunner, portfolio manager at Swarthmore Group in Philadelphia. Holiday shopping traditionally kicks off the day after Thanksgiving, known as Black Friday, as stores offer deals and discounts to lure consumers.