The euro, however, fell against the dollar after the head of the European Central Bank said in the afternoon that support by the International Monetary Fund for debt-stricken Greece was poor.
Concerns about an enormous supply of debt continued to weigh on US Treasuries prices following a weak sale seven-year notes in the afternoon, the last in a series of three auctions this week, which all have been poorly received.
News that France and Germany agreed on the terms of a financial aid plan for Greece just before an EU summit on Thursday had eased some of the debt fears that had battered global stocks and sent the euro to its weakest since May 2009.
But the improvement in sentiment reversed after the head of the ECB, Jean-Claude Trichet, spoke on disappointment on aid by the IMF.
On Wall Street, key stock indexes rose more than 1 percent as wireless chip maker Qualcomm and consumer electronics retailer Best Buy boosted their profit outlooks and financials surged for a second day, boosting sentiment that consumer spending will help drive the economic recovery.
US stocks were also supported by data showing the number of US workers filing new applications for unemployment insurance fell sharply last week. The number of those continuing to receive benefits after an initial week of aid fell to the lowest point since December 2008.
The Dow Jones Industrial Average gained 107.85 points, or 1.0 percent, to 10,945.05, while the Standard & Poor's 500 Index rose 11.39 points, or 0.98 percent, to 1,179.11. The Nasdaq Composite Index was up 31.02 points, or 1.29 percent, at 2,429.78.
In Europe, the FTSEurofirst 300 index of top European shares finished 1.01 percent higher at 1,083.34 points, the highest close since early October 2008. The index is up 3.6 percent this year and has jumped 67 percent since hitting a record low in March last year.
The euro fell to a session low against the US dollar after Trichet said IMF involvement to bail out Greece would be bad.
"If the IMF or some other body exercises the responsibility in lieu of the Eurogroup or instead of governments, it is evidently very, very bad," Trichet said.
The euro was last down 0.2 percent against the dollar at $1.3289 after going as low as $1.3279.
US Treasuries prices added to Wednesday's losses, sending 10-year yields to a 2-1/2-month high, after a sale of $32 billion in seven-year notes drew poor investor demand, following the same pattern seen in the previous two auctions this week.
The benchmark 10-year US Treasury note lost 17/32 in price, sending the yield to 3.9165 percent. The 30-year US Treasury bond was down 29/32, with the yield at 4.7838 percent.
Oil prices clawed back some lost ground on Thursday. New York's main contract, light sweet crude for delivery in May, climbed 80 cents to $81.41 a barrel. Brent North Sea crude for May rose 77 cents to $80.39 in late London trading.
"Crude oil prices rose slightly, as the euro showed (some) strength against the US dollar and provided some help to the energy market," Sucden analyst Myrto Sokou said.
A weaker US unit tends to lift oil demand because dollar-priced crude becomes cheaper for buyers using stronger currencies.
Oil prices had fallen on Wednesday, as traders tracked the surging dollar as the euro was hammered by news of a credit rating downgrade to Portugal, which jangled market worries about a wider euro zone debt crisis.
Oil was also hit by US demand worries after a government inventory report showed a jump in American crude stocks.
The US government's Department of Energy said in its weekly inventory report on Wednesday that crude oil inventories rose 7.2 million barrels last week, confounding expectations of an increase of 1.7 million barrels.
"The report... showed a very substantial increase in crude oil inventory over the past week," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.
