Wall Street gained along with the price of oil and shares of Pfizer after it agreed to buy Hospira for about US$15 billion, while the latest US jobs data offered more evidence of strength in the American economy.
US crude prices jumped more than 6 percent on Thursday, following a drop of almost 9 percent on Wednesday.
In afternoon trading in New York, the Dow Jones Industrial Average climbed 0.86 percent, the Standard - Poor's 500 Index advanced 0.65 percent, while the Nasdaq Composite Index rose 0.54 percent.
Gains in shares of Pfizer and those of Visa, last up 1.9 percent each, helped propel the Dow higher. Shares of Hospira soared, last up 35.3 percent.
"I don't think this deal is a game changer for Pfizer but helps them build out their sterile injectables business without wildly overpaying for assets, as the company has done in the past," portfolio manager Les Funtleyder of E Squared Asset Management told Reuters.
Shares of Merck extended the previous day's declines for the biggest percentage drop in the Dow, down 0.6 percent.
There was further evidence of a solid jobs market in the US before Friday's government non-farm payrolls report. Initial claims for state unemployment benefits rose less than expected, increasing 11,000 to a seasonally adjusted 278,000 for the week ended January 31, according to Labor Department data.
"Employment continues to improve at a fairly moderate pace, which feels breakneck compared to the past, which means people are getting jobs and that is a big positive for the economy," David Heidel, regional investment strategist at US Bank Wealth Management in Minneapolis, Minnesota, told Reuters.
"The problem is every time we get confirmation that the jobs picture is improving, it also sparks worries the Federal Reserve will act sooner than later to raise rates and continues this schizophrenic up and down forces on risk assets like equity prices," Heidel said.
Separately, a Commerce Department report showed the US trade deficit unexpectedly widened in December, climbing 17.1 percent to US$46.6 billion.
"It is not hard to come up with reasons for the weakness in today's report - sluggish foreign growth and a strong dollar are the obvious ones,"Michael Feroli, an economist at JPMorgan in New York, told Reuters.
In Europe, the Stoxx 600 Index ended the session with a 0.1 percent increase from the previous close, as did the UK's FTSE 100 Index. France's CAC 40 Index gained 0.2 percent. Germany's DAX Index slipped 0.1 percent.
The Greek ASE Index slid 3.4 percent as the country's lenders slumped after the European Central Bank said it would no longer accept Greek bonds as collateral from banks.
"The consequences of the current turmoil in Greece are extremely important," said Pierre Mouton, who helps oversee US$8 billion at Notz, Stucki - Cie in Geneva, told Bloomberg. "Greece puts itself at the extreme of the spectrum, while the ECB stands at the opposite. Now it's bargaining time and they should get closer as time goes by."