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US STOCKS-S&P scales new peak as investors bet on growth

* Jobless claims fall more than expected, Q1 GDP revised

* Apple to buy Beats for $3 bln, producer Iovine joins

* Hillshire jumps, Tyson's bid outshines Pilgrim's Pride's

* Indexes up: Dow 0.1 pct, S&P 500 0.2 pct, Nasdaq 0.3 pct

(Updates prices)

NEW YORK, May 29 (Reuters) - U.S. stocks rose on Thursday and the benchmark S&P 500 index scaled new peaks as traders bet on strong growth in the second quarter even as data showed the world's largest economy contracted in the first quarter.

The gains were supported by a report showing the number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to a strengthening labor market. Separately, the Commerce Department slashed its estimate of gross domestic product to show the economy shrank at a 1.0 percent annual rate.

"Personal consumption was actually revised up, it was a big number and it held," said Phil Orlando, chief equity market strategist at Federated Investors in New York, referring to details in the gross domestic product data released earlier in the day.

"This gives me greater confidence that we're looking at 3 handles on GDP for the rest of the year."

Citi analysts said the U.S. economy could grow nearly 4 percent in the second quarter while Goldman Sachs upped its estimate to 3.9 percent.

The Dow Jones industrial average rose 16.31 points, or 0.1 percent, to 16,649.49, the S&P 500 gained 3.77 points, or 0.2 percent, to 1,913.55 and the Nasdaq Composite added 11.80 points, or 0.28 percent, to 4,236.87.

The U.S. 10-year note yield brushed against 2.40 percent to hit its lowest since last June, on expectations of further policy easing by the European Central Bank next week. Low yields could continue to entice investors into dividend-paying stocks, with the high-yielding utilities sector widely outperforming the S&P 500 benchmark so far this year.

"Lower yields have nothing to do with the domestic economy but the anticipation of the ECB pulling the trigger next week," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

He said bonds were also a "safety bet after the European elections, as the periphery voted against austerity, so the fear might be that eventually those economies could get themselves into more trouble."

Hillshire Brands shares soared 16.3 percent to $52.12 after Tyson Foods offered to top a bid from Pilgrim's Pride. Tyson shares rose 7.3 percent to $43.74 and Pilgrim's Pride fell 1.7 percent to $24.94.

Shares of cyber security software maker Palo Alto Networks jumped 8.7 percent to $75.58 a day after it reported better-than-expected quarterly revenue as it added more customers, and said it settled patent litigation with network gear maker Juniper Networks.

Apple shares rose 0.9 percent to $629.70 after hitting its highest in a year and a half, a day after announcing it will buy music streaming and audio equipment company Beats for about $3 billion and bring its founders, producer Jimmy Iovine and rapper Dr. Dre, into Apple's ranks.

Abercrombie & Fitch shares jumped 4.6 percent to $36.73 after sales fell less than expected.

(Editing by Nick Zieminski and Bernadette Baum)

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