* April CPI up less than expected, core CPI growth slows
* S&P 500 tops 100-day avg, a day after claiming 50-day avg
* All 11 major S&P sectors higher, tech biggest boost
* L Brands, Booking Holdings drop on disappointing forecasts
* Indexes up: Dow 0.96 pct, S&P 0.97 pct, Nasdaq 0.90 pct (Updates to early afternoon)
By Sruthi Shankar
May 10 (Reuters) - U.S. stocks rose sharply on Thursday, with the benchmark S&P 500 topping a key technical level for the second straight day, after tepid inflation data eased worries of faster interest rate hikes this year.
The Labor Department's consumer price index increased 0.2 percent in April, less than economists' expectations, as rising costs for gasoline and rental accommodation were tempered by a moderation in healthcare prices.
Core CPI, which excludes food and energy components, edged up 0.1 percent in April, slower than the previous two months, and did little to alter traders' expectations of a June rate hike.
"This data lends to the argument that the Fed can normalize patiently, but the flip side is that prolonged policy accommodation has yet failed to accelerate inflation," Peter Cecchini, chief market strategist at Cantor Fitzgerald in New York, wrote in a note.
The markets, after remaining subdued in the past few weeks on fears of rising inflation and its fallout, rallied broadly with all 11 major S&P sectors posting gains.
Technology stocks were the biggest boost to the S&P 500 on Apple's 1.4 percent rise to a record high.
The S&P 500 reclaimed its 100-day moving average for the first time since April 19. That came a day after it topped its 50-day average, a key indicator of short-term momentum.
At 12:40 p.m. ET, the Dow Jones Industrial Average was up 234.65 points, or 0.96 percent, at 24,777.19, the S&P 500 was up 26.24 points, or 0.97 percent, at 2,724.03 and the Nasdaq Composite was up 65.76 points, or 0.90 percent, at 7,405.67.
CenturyLink gained 8 percent, the most on the S&P, after its first-quarter results. That helped the telecoms sector rise 1.56 percent, the most among the 11 sectors.
AXA Equitable Holdings, the U.S. division of French insurer AXA, slipped 0.5 percent in its market debut. Although its offering raised less than targeted, it was still the biggest U.S. IPO this year. The top losers on the S&P 500 included Victoria's Secret owner L Brands, which fell 8.6 percent, and Booking Holdings, formerly called Priceline, which dropped 5.3 percent. Both companies gave disappointing outlooks.
Advancing issues outnumbered decliners for a 3.13-to-1 ratio on the NYSE and for a 2.19-to-1 ratio on the Nasdaq.
The S&P index recorded 34 new 52-week highs and two new lows, while the Nasdaq recorded 135 new highs and 20 new lows. (Reporting by Sruthi Shankar and Savio D'Souza in Bengaluru; Editing by Anil D'Silva)