US STOCKS-Wall St rises but investors wary about Fed

* CBOE VIX's high level suggests caution before Friday

* Bank of America leads banks higher on heavy volume

* Dow up 0.6 pct, S&P up 0.6 pct, Nasdaq up 0.2 pct * For up-to-the-minute market news see [STXNEWS/US] (Updates to late afternoon; changes byline)

By Angela Moon

NEW YORK, Aug 24 (Reuters) - U.S. stocks edged higher on Wednesday, extending the previous day's 3 percent rally, in anticipation the Federal Reserve chief would hint of stimulus measures to aid the struggling economy on Friday.

The CBOE Volatility index VIX <.VIX>, Wall Street's "fear gauge," slipped but was still relatively high.

The VIX generally moves inversely to the stock market as it tracks the price investors pay for protective options on the S&P 500 index.

"The high VIX really puts a cautious spin on the optimism that we are seeing in the stock market ahead of Friday," said Randy Frederick, director of trading and derivatives at the Schwab Center for Financial Research in Texas, Austin.

Fed Chairman Ben Bernanke is due to address central bankers at an annual symposium in Jackson Hole, Wyoming. His speech last year laid the groundwork for the Fed's unprecedented $600 billion bond buying program to revive a sputtering U.S. economy.

The Dow Jones industrial average <.DJI> was up 64.18 points, or 0.57 percent, at 11,240.94. The Standard & Poor's 500 Index <.SPX> was up 6.45 points, or 0.55 percent, at 1,168.80. The Nasdaq Composite Index <.IXIC> was up 3.60 points, or 0.15 percent, at 2,449.66.

Bank of America Corp rose 9.8 percent to $6.92, reversing losses on Tuesday, when the Dow component hit a 2-1/2-year low on fears it may have to raise large amounts of capital. BofA shares remain down more than 30 percent so far this month. For details, see [ID:nN1E77M250]

The S&P financials index <.GSPF> advanced 1.6 percent, with JPMorgan Chase & Co shares up 1.7 percent at $35.36.

Sectors that led Tuesday's rally, such as energy and technology, shed gains. Growth stocks such as Nvidia fell 2.7 percent to $12.88 and Netflix dropped 3 percent to $213.96.

Equity indexes rose as much as 1 percent earlier after a stronger-than-expected increase in July durable goods orders but gave up those gains by late morning. The government reported that orders for long-lasting U.S. manufactured goods surged in July, rising twice as much as economists had forecast. [ID:nN1E77N096]

Exchange-traded funds tracking gold stocks and gold-mining stocks fell after bullion futures dropped more than 4 percent. The SPDR Gold Trust Index declined 3.7 percent, while the Market Vectors Gold Miners Index fell 4 percent.

Among individual decliners, Barrick Gold shares dropped 4.3 percent to $48.49 and Goldcorp Inc shares fell 5.3 percent to $48.58. (Reporting by Angela Moon, Editing by Kenneth Barry)