US STOCKS-Wall St up sharply as fear of rising interest rates ebbs

* U.S. bond yields ease further from peaks

* Focus on Fed chief's testimony this week

* Berkshire Hathaway gains on Buffett's buyback comments

* Indexes up: Dow 1.5 pct, S&P 1.1 pct, Nasdaq 1.1 pct (Updates to late afternoon)

Feb 26 (Reuters) - U.S. stocks rose sharply on Monday as a decline in Treasury yields assuaged investors' concerns about rising interest rates.

All three major indices rose to more than three-week highs. The S&P 500 is now just 3.5 percent below its peak on Jan. 26. The CBOE Volatility Index also dipped slightly, last at 16.33, though it remains above the levels seen before the sell-off earlier this month.

"Volatility is going to be here again," said Tom Plumb, president and chief investment officer of Plumb Funds in Madison, Wisconsin. "But as long as the economy is strong and interest rates are moderate, I think there is still some upside to go."

The U.S. 10-year Treasury yield eased to 2.8605 percent , slipping from the four-year high it hit last week. On Friday, the Federal Reserve said it expected economic growth to remain steady and saw no serious risks on the horizon that might pause its planned pace of rate hikes.

Fed chairman Jerome Powell faces questions, starting on Tuesday, from both houses of the U.S. Congress in a semi-annual testimony starting on Tuesday, his first major set piece since he took over from Janet Yellen earlier this month.

Easing concerns about interest rates will help shift investors' attention to continued economic strength, Plumb said.

"We're getting an unprecedented stimulus for a maturing economy not coming out of a recession," he said, referring to the federal tax overhaul signed into law in December.

At 3:14 p.m. ET, the Dow Jones Industrial Average rose 385.21 points, or 1.52 percent, to 25,695.2, the S&P 500 gained 30.36 points, or 1.11 percent, to 2,777.66 and the Nasdaq Composite added 77.86 points, or 1.06 percent, to 7,415.25.

Technology stocks gained 1.5 percent, leading the S&P 500's 11 major sectors on Monday. They have been the top gainers so far in 2018, with an 9.1-percent rise.

Qualcomm was up 5.7 percent after the chipmaker urged Broadcom to enter into price negotiations for the first time on Broadcom's $117 billion offer for the company.

Berkshire Hathaway gained 3.7 percent after Warren Buffett said his conglomerate, which is sitting on $116 billion of cash, is "more inclined" to repurchase stock than pay dividends as a means to use excess cash.

Advancing issues outnumbered declining ones on the NYSE by a 1.99-to-1 ratio; on Nasdaq, a 1.81-to-1 ratio favored advancers.

The S&P 500 posted 30 new 52-week highs and 1 new low; the Nasdaq Composite recorded 102 new highs and 32 new lows. (Additional reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'Silva and Nick Zieminski)