By Agence France-Presse
Investors were also heartened by word that the leaders of the United States and China were making renewed efforts to resolve their trade war ahead of planned meeting this month in Argentina.
The benchmark Dow snapped a four-day losing streak while the S&P 500 and Nasdaq both added more than one percent.
Peter Cardillo of Spartan Capital told AFP that US stocks could see strong year-end gains if investors came to believe a US-China trade deal was likely and oil prices also continued to recover.
"If that happens the market would rally strongly," he said.
US stocks had been battered on all sides since last week as fears of weakening demand, collapsing oil prices and slowing global growth caused investors to retreat.
Benchmark crude prices rose slightly in New York after 12 consecutive drops. Dow members Exxon Mobil and Chevron added one and two percent respectively.
European equities, however, were hammered and the pound fell sharply as a string of British government resignations put Prime Minister Theresa May and her draft Brexit deal in serious jeopardy.
May spent several hours in Parliament defending the agreement from attack on all sides, with very few voices offering support.
Brexit deal a 'dead duck'?
May held firm, however, telling the house it was the best deal on offer, but it looked increasingly likely she could soon face a leadership challenge after leading Brexiteer MP Jacob Rees-Mogg formally called for a vote of no confidence.
The pound lost around two percent against the dollar to trade at $1.2778.
"The performance of the pound seems to perfectly reflect the mood in parliament and everywhere else right now. Even the weather is grey and gloomy," Oanda analyst Craig Erlam told AFP.
"The pound is under heavy pressure... as the UK-EU deal begins to look like a dead duck," noted IG analyst Chris Beauchamp.
S&P Global Ratings said May's draft accord "represents material progress in negotiations" but it was uncertain if Parliament would approve it.
There was some early support for London stocks as the weaker pound benefits the major exporters on the FTSE-100 index but the market then reversed direction as the political crisis deepened in the afternoon to finish little changed on the day.
Elsewhere in Europe, stocks were mostly weaker, undercut by the uncertainty surrounding Brexit and Italy's fiscal troubles.
In the US, the DJIA was down 0.25 percent at around 1650 GMT, with S&P 500 little changed and the NASDAQ up 0.41 percent.
Asian equities mostly rose Thursday, with Hong Kong and Shanghai rallying on hopes for an easing of the China-US trade war, while energy firms also enjoyed a much-needed bounce from the stabilizing in oil prices.
Key figures around 2200 GMT
New York - Dow: UP 0.8 percent at 25,290.39 (close)
New York - S&P 500: UP 1.1 percent at 2,730.33 (close)
New York - Nasdaq: UP 1.7 percent at 7,259.03 (close)
Pound/dollar: DOWN at $1.2778 from $1.2977 Wednesday at 2200 GMT
Euro/pound: UP at 88.64 pence from 87.05 pence
Euro/dollar: UP at $1.1325 from $1.1310
Dollar/yen: DOWN at 113.62 yen from 113.63 yen
London - FTSE 100: UP 0.1 percent at 7,038.01 points (close)
Frankfurt - DAX 30: DOWN 0.5 percent at 11,353.67 (close)
Paris - CAC 40: DOWN 0.7 percent at 5,033.62 (close)
Tokyo - Nikkei 225: DOWN 0.2 percent at 21,803.62 (close)
Hong Kong - Hang Seng: UP 1.8 percent at 26,103.34 (close)
Shanghai - Composite: UP 1.4 percent at 2,668.17 (close)
Oil - Brent Crude: UP 50 cents at $66.62 per barrel
Oil - West Texas Intermediate: UP 21 cents at $56.46