Stocks rose on Thursday as appetite for riskier assets returned after a pledge by European leaders to support debt-ridden Greece eased fears of a possible sovereign default.

Initially stocks had wavered in choppy trade due to a lack of specifics on the European Union's proposals.

By midday Wall Street mounted a sharp advance as investors saw the EU pledge as a bid to avert fallout from fiscal troubles in Greece and other members of the European single currency like Portugal and Spain.

Data pointing to stabilization in the U.S. labor market gave the market a further boost, along with a broker upgrade of bellwether 3M Co , whose stock shot up 1.6 percent.

They moved everything up on more of a posture by the EU to come up with something creative on Greece as opposed to not knowing what to do, said Stephen Carl, principal and head of U.S. Equity Trading at the Williams Capital Group in New York.

It looks like they are putting things in place and the market is reacting favorably just because there is a plan. Let's see how they implement it.

The Dow Jones industrial average <.DJI> rose 96.66 points, or 0.96 percent, to 10,135.04. The Standard & Poor's 500 Index <.SPX> gained 8.90 points, or 0.83 percent, to 1,077.03. The Nasdaq Composite Index <.IXIC> climbed 27.42 points, or 1.28 percent, to 2,175.29. Standouts included shares of energy, technology and natural resource companies.

Before the bell a government report showed applications for jobless insurance fell more than expected in the latest week, a signal the labor market continues to mend.

Shares of 3M Co, a diversified manufacturer, rose to $79.85 after Sanford C. Bernstein upgraded the company to outperform from market-perform, citing better margins and a higher growth rate.

Caterpillar Inc , another big manufacturer, rose 5.2 percent to $55.94 and ranked as a top boost to the Dow industrials.

On the Nasdaq, shares of video game publisher Activision Blizzard Inc jumped 9.9 percent to $11.09 after the company posted better-than-expected results and said it would start paying an annual dividend.

With the S&P 500 falling more than 7 percent from its 15-month closing peak of January 19, investors had been looking for a major catalyst to spur a search for cut-price stocks.

The S&P 500 is now only up 59.3 percent since its March 2009 bottom after having pulled back from a run-up of 70 percent since that significant low.

(Reporting by Ellis Mnyandu; Editing by Andrew Hay)