U.S. stocks advanced on Wednesday as investors remained bullish about the prospects for equities in 2011, keeping a December rally intact.

The S&P 500 has risen 6.7 percent this month, pushing the benchmark index above levels reached on September 12, 2008, the last trading day before Lehman Brothers collapsed, as improving economic data and a changed political landscape have encouraged risk-taking.

There is certainly a lot more optimism out there, either founded or not, in terms of stock prices, said Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland.

At the end of the day, most companies have prepared their balance sheets, and they are looking to grow either organically or through acquisitions. The U.S. market is probably seen as a place to find high quality companies right now.

The Dow Jones industrial average <.DJI> gained 40.83 points, or 0.35 percent, to 11,616.37. The Standard & Poor's 500 Index <.SPX> rose 2.66 points, or 0.21 percent, to 1,261.17. The Nasdaq Composite Index <.IXIC> added 4.81 points, or 0.18 percent, to 2,667.69.

Retailers rose as BJ's Wholesale Club Inc jumping 7 percent to $47.60 after the New York Post reported buyout firm Leonard Green & Partners remained interested in buying the warehouse club operator and may launch a hostile bid.

The Morgan Stanley Retail index <.MVR> climbed 1.1 percent, and the S&P Retail index <.RLX> gained 0.6 percent.

Molycorp Inc , which owns a rare-earth mine in Mountain Pass, California, was up 7 percent to $49.41 after China cut export quotas on the minerals, threatening to reduce already-tight global supplies and risking U.S. action.

Private equity company Blackstone Group LP made a preliminary offer for Centro Properties Group's 600 U.S. shopping center properties, the Wall Street Journal reported. Blackstone added 1.1 percent to $14.29.

(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)