Updates throughout

By Ragini Mathur and Avinash P

July 15 (Reuters) - Wall Street's main indexes rose slightly on Wednesday as cooler-than-expected producer inflation data and upbeat corporate earnings lifted sentiment, but a selloff in chip stocks limited gains.

PayPal PYPL.O jumped nearly 14% after sources told Reuters payments company Stripe and private equity firm Advent International have offered to acquire it for $60.50 per share — around a 28% premium to the stock's Tuesday close.

Financial firms helped set a positive tone for the second-quarter earnings season for a second straight day. The S&P 500 financial sector .SPSY gained 1.1%.

BlackRock BLK.N shares advanced 7.3%, after the asset manager beat profit expectations. Morgan Stanley MS.N, however, slipped 1% despite reporting a stronger-than-expected quarterly profit.

"Banks have rallied to record highs this month as improving fundamentals and a broadening in market leadership beyond technology have provided a powerful tailwind," said Adam Turnquist, chief technical strategist at LPL Financial.

"Second-quarter earnings from the major money center banks reinforced the constructive outlook."

Still, weakness in semiconductor shares weighed on S&P 500 and Nasdaq. The Philadelphia SE Semiconductor index fell 2.9% to a one-week low, reversing some of its gains from earlier in the week.

The S&P 500 technology sector .SPLRCT lost 0.8%. Strength in mega cap stocks offered some support, with Apple AAPL.O leading gains among the "Magnificent Seven" and rising 3.6%.

The earnings season is gathering pace at a crucial point for equities. The S&P 500 has climbed more than 10% this year and is within striking distance of its June record close, leaving the rally vulnerable to any disappointment in corporate results.

PRODUCER PRICES UNEXPECTEDLY FALL

Data on Wednesday showed the Producer Price Index for final demand declined 0.3% in June, against forecasts for a flat reading, adding to signs that inflation was easing before the ongoing escalation in the Middle East conflict.

"It's hard to feel too excited about last month's drop in producer prices, which largely reflected lower energy prices —prices which rebounded in the first half of July as energy traffic through the Strait of Hormuz slowed," said Charlie Ripley, portfolio manager at Allianz Investment Management.

The report followed Tuesday's softer-than-expected consumer inflation data, which tempered expectations for an imminent Federal Reserve rate hike.

Traders now see about a 12% chance of a quarter-point rate increase at the Fed's next meeting later this month.

Wednesday also marked the second day of Fed Chair Kevin Warsh's testimony before Congress. Warsh told lawmakers the Fed was not meeting its price stability mandate, but offered little guidance on the policy path ahead, saying options included a rate hike, a hold or a cut.

At 11:51 a.m. ET the Dow Jones Industrial Average .DJI rose 142.98 points, or 0.27%, to 52,651.25, the S&P 500 .SPX gained 5.50 points, or 0.07%, to 7,549.09 and the Nasdaq Composite .IXIC gained 53.06 points, or 0.20%, to 26,160.07.

Elevance Health ELV.N slipped 8.6% even after raising its annual profit forecast, as the revision fell short of investors' lofty expectations.

Advancing issues outnumbered decliners by a 1.91-to-1 ratio on the NYSE and by a 1.51-to-1 ratio on the Nasdaq.