* Wall St coming off extended decline
* Bank stocks higher after Fed stress tests
* Weekly jobless claims fall; retail sales disappoint
* Intel shares fall after lowered outlook
* Indexes up: Dow 0.9 pct, S&P 0.8 pct, Nasdaq 0.4 pct (Updates to mid-morning trading)
By Ryan Vlastelica
NEW YORK, March 12 (Reuters) - U.S. stocks rose in a broad rally on Thursday, with banking stocks among the biggest gainers of the day, though tech shares were pressured by a weak outlook from Intel.
All 10 primary S&P 500 sectors were higher on the day, representing a partial rebound off a recent bout of weakness, which took the S&P 500 down in eight of the past 11 sessions, and off 3 percent over the past four sessions alone.
The weakness has largely been driven by concerns the Fed could raise rates as early as June. Last week's strong payroll report solidified this view as the central bank said it would begin raising rates when it deemed the economy strong enough.
In the latest data, jobless claims fell far more than expected in the latest week, supporting the theory that the labor market is rapidly strengthening. Retail sales unexpectedly dropped for a third month in February.
"I've been a believer in a June rate hike for a while, but the odds really went up on Friday, and the market action we've seen since then is in line with the volatility we've historically seen around rate hikes," said James Liu, global market strategist for JPMorgan Funds in Chicago.
The S&P financial sector rose 1.3 percent as one of the biggest gainers on the day in the wake of the Federal Reserve's annual check-up on the industry's health.
Citigroup passed, allowing it to raise payouts and sending shares up 3.3 percent to $54.05. Bank of America was told to get a better grip on internal controls and its data models; shares fell 0.7 percent to $16.
Intel Corp slashed its first-quarter revenue forecast, citing lower-than-expected demand for business PCs and lower inventory levels across the PC supply chain. Shares of the Dow component fell 4 percent to $31.03 and also limited the Nasdaq's advance.
The U.S. dollar index fell 0.6 percent but remains up about 10 percent for the year, building on last year's rise of nearly 13 percent.
"The dollar has been strengthening dramatically, which investors are correctly interpreting as implying weak earnings growth over coming quarters," Liu said. First-quarter S&P 500 earnings are now expected to decline 2.7 percent from a year ago, Thomson Reuters data showed.
Lumber Liquidators rose 12 percent to $36.79 in volatile trading. The company, facing U.S. government investigations over claims of dangerous levels of a cancer-causing substance in its flooring products, stood by the safety its products and offered free indoor air-quality testing for qualifying consumers.
The Dow Jones industrial average rose 159.55 points, or 0.9 percent, to 17,794.94, the S&P 500 gained 15.23 points, or 0.75 percent, to 2,055.47 and the Nasdaq Composite added 17.44 points, or 0.36 percent, to 4,867.38.
Advancers outnumbered decliners on the NYSE 2,204 to 679, for a 3.25-to-1 ratio; on the Nasdaq, 1,692 issues rose and 843 fell, a 2.01-to-1 ratio.
The S&P 500 was posting 13 new 52-week highs and 8 new lows; the Nasdaq Composite was recording 87 new highs and 50 new lows.
Editing by Bernadette Baum and Nick Zieminski