(Updates to middday, changes byline)

By Justin Grant

NEW YORK, March 12 (Reuters) - U.S. stocks rose on Wednesday as optimism about the Federal Reserve's efforts to ease credit market strains boosted the financial sector for a second day, while industrial shares climbed as Caterpillar Inc (CAT.N: Quote, Profile, Research) raised its revenue forecast.

An S&P index of financial shares gained 1 percent.

Dow component Caterpillar, the world's largest maker of construction and mining equipment, increased its forecast for 2010 revenue, crediting in part continued spending for worldwide infrastructure. Shares of Caterpillar, seen as an economic bellwether, climbed 4.4 percent to $75.77.

Meanwhile, industrial and media conglomerate General Electric (GE.N: Quote, Profile, Research) added 2.8 percent to $34.34 after Chief Executive Jeffrey Immelt said in a letter to investors that the company is well-positioned for a challenging year.

On Tuesday, Immelt bought 62,000 shares of the conglomerate at prices between $32.72 and $33, according to a filing with the U.S. Securities and Exchange Commission.

Multinational companies like General Electric also got a lift from the dollar's slump to historic lows, said Tom Sowanick, chief investment officer of Clearbrook Financial in Princeton, New Jersey.

"Stocks continued their rally today following the Fed's new program designed to ease the liquidity squeeze on Wall Street," Sowanick said.