April 9 (Reuters) - Wall Street's main indexes gained broadly across sectors on Thursday as investors assessed developments in the Middle East conflict that improved risk appetite.

Israeli Prime Minister Benjamin Netanyahu said he has instructed Israel to begin peace talks with Lebanon that would also include the disarming of Hezbollah.

The comments follow Iran's warning that no peace deal could be reached unless Israel ceased bombings on Lebanon, putting President Donald Trump's fragile two-week ceasefire with Iran into jeopardy.

Following the news, oil prices slipped by more than $4 a barrel, after gaining earlier in the session, with the S&P 500 energy index down 1.2%

"The truce may have bought some time, but it does not fully remove the risk of renewed escalation," said analysts led by Dr. Murat Ulgen, global head of macro strategy at HSBC.

"If the ceasefire breaks down, markets would quickly have to reprice back towards a more persistent supply shock, especially if renewed disruption keeps the Strait of Hormuz effectively closed," said Ulgen.

At 12:40 p.m. ET, the Dow Jones Industrial Average rose 247.66 points, or 0.52%, to 48,155.97, the S&P 500 gained 33.67 points, or 0.50%, to 6,816.48 and the Nasdaq Composite gained 134.55 points, or 0.60%, to 22,770.06.

Consumer discretionary stocks led broader gains on the S&P 500, supported by a 4.3% gain in Amazon.com after its CEO said AI services at its cloud-computing unit were generating annualized revenue of over $15 billion.

Technology stocks on the S&P 500 pared declines to trade flat. Software stocks, however, were still under pressure with the iShares Expanded Tech-Software ETF down 4.2%.

"The Iran conflict happened and software stocks didn't sell off as much as others... maybe there's just some profit-taking and repositioning in those names," said Dustin Thackeray, partner and head of portfolio management at Crewe Advisors.

Gains in Caterpillar and Honeywell countered declines in Salesforce and IBM, buoying the Dow.

The moves come a day after the S&P 500 and Nasdaq marked their biggest one-day jumps in over a week, and the Dow in a year.

Meanwhile, data showed U.S. inflation increased as expected in February and likely rose further in March amid the Iran war, while economic growth slowed more than previously estimated in the fourth quarter.

Friday's consumer prices index number for March will grab the spotlight as investors wait to see the economic impact of elevated oil prices stemming from the conflict.

Money market participants are expecting only about 30% chances of a 25 basis-point interest rate cut by end-2026, compared with a 56% chance a day ago, per LSEG-compiled data.

They expected two cuts this year before the war broke out, while bets for a rate hike in December had also risen during the conflict.

Among other movers, Constellation Brands jumped 7.3% after the Corona beer maker posted a smaller-than-expected drop in fourth-quarter sales.

Brown-Forman jumped 11.7% after a report said alcoholic beverage maker Sazerac is exploring a deal with the Jack Daniel's maker.

Advancing issues outnumbered decliners by a 1.77-to-1 ratio on the NYSE and by a 1.29-to-1 ratio on the Nasdaq.

The S&P 500 posted 42 new 52-week highs and 19 new lows while the Nasdaq Composite recorded 117 new highs and 119 new lows.

(Reporting by Purvi Agarwal, Avinash P and Sruthi Shankar in Bengaluru; Editing by Shinjini Ganguli and Devika Syamnath)

By Avinash P and Purvi Agarwal