Wall Street stocks rose on Wednesday, snapping a three-day losing streak, after Federal Reserve Chairman Ben Bernanke suggested policymakers are actively considering further stimulus for the economy if it is needed.

Major indexes rose more than 1 percent while the CBOE Volatility Index <.VIX>, Wall Street's fear gauge, fell 8.2 percent to 18.23. The S&P 500 had lost about 2.3 percent over the past three days on concerns about Europe's debt crisis.

If yesterday was the peak of panic, we could have some additional positive benefits from Bernanke's comments just from the fact that the Fed would do more if needed, said Brian Reynolds, chief market strategist at WJB Capital Group in New York.

We're in an extremely slow economic environment. There's some worry among investors that some stimulus may be needed.

The Dow Jones industrial average <.DJI> was up 146.64 points, or 1.18 percent, at 12,593.52. The Standard & Poor's 500 Index <.SPX> was up 14.43 points, or 1.10 percent, at 1,328.07. The Nasdaq Composite Index <.IXIC> was up 35.28 points, or 1.27 percent, at 2,817.19.

Energy and material stocks were the top gainers. The S&P energy sector index <.GSPE> was up 1.9 percent and the materials sector index <.GSPM> rose 1.7 percent.

Bernanke told a House committee, The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support.

His comments came as investors were divided whether the Fed would introduce another round of stimulus to boost the economy, especially after a dismal jobs report in June. The Fed's easy-money policies since 2008 have been fueling the stock market rally.

Wall Street got an early boost from an overseas data that showed China's economy grew faster than expected in the second quarter.

But Investors remained cautious over developments in Europe. Moody's downgraded Ireland's debt to junk on Tuesday and said Ireland was likely to follow Greece in needing a second bailout. Irish bond yields jumped to record highs.

News Corp shares rose 4 percent to $15.95 after the company announced that it has withdrawn a $12 billion bid to buy out the 61 percent of broadcaster BSkyB it does not already own. News Corp is at the center of allegations that one of its tabloid newspapers committed criminal acts.

Electronic Arts Inc , the video game publisher, is buying PopCap Games in a deal worth up to $1.3 billion as it tries to ramp up its social and casual games portfolio and better compete with Zynga Inc. The company's shares fell 0.6 percent to $24.02.

(Reporting by Angela Moon, Editing by Kenneth Barry)

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