* Pfizer to buy Hospira for about $15 billion
* Michael Kors tumbles after results, outlook
* Crude climbs to push energy shares higher
* Indexes up: Dow 0.8 pct, S&P 0.76 pct, Nasdaq 0.62 pct (Updates late morning)
By Chuck Mikolajczak
NEW YORK, Feb 5 (Reuters) - U.S. stocks rallied on Thursday after an upbeat report on the labor market, a continued rise in oil prices and news Pfizer would buy Hospira in a massive deal.
Weekly jobless claims rose less than expected last week. The report comes on the heels of a private payrolls report that fell short of expectations on Wednesday and ahead of a monthly employment report on Friday.
Oil prices bounced from the prior session's selloff, with U.S. crude up 5.3 percent to $51.04 and Brent up 4.9 percent to $56.81. The S&P energy index jumped 1.5 percent.
"It seems like the (energy) stocks are trading with the fundamentals, they are not richer than the fundamentals, so maybe we have some 'up' opportunity here," said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.
"This could be the opportunity, but the thing is you don't know how long it is going to take to come back where it has been - we are talking about just six months into the (oil price) decline, and it could be another four or five years" before prices return to where they were in June, Morris said.
Adding to the positive tone was news that Pfizer would buy Hospira Inc for about $15 billion to gain access to its biosimilars. Hospira shares rocketed 35.1 percent to $87.56 as the best performer on the S&P 500, while Pfizer gained 2.8 percent $32.97 as one of the biggest boosts to the index.
Other data showed the U.S. trade deficit in December widened sharply to its highest since 2012, which could damp down the fourth-quarter growth estimate, and nonfarm productivity fell more than expected in the fourth quarter.
The Dow Jones industrial average rose 141.49 points, or 0.8 percent, to 17,814.51, the S&P 500 gained 15.54 points, or 0.76 percent, to 2,057.05 and the Nasdaq Composite added 29.15 points, or 0.62 percent, to 4,745.85.
The S&P 500 has been subject to volatility recently due to swings in crude prices and developments regarding Greek debt negotiations. Greece said on Thursday it would not be "blackmailed" by its European Union partners but it wanted to find a joint solution to its debt and austerity crisis.
Investors kept an eye on retailers' monthly sales results to assess the impact lower gas prices have had on consumer spending. L Brands rose 6 percent to $91.67 after reporting quarterly results and a 7 percent rise in January same-store sales. The S&P retail index gained 1.2 percent.
Michael Kors shares fell 4.3 percent to $68.30 after the luxury accessories retailer posted third-quarter results and forecast a lower-than-expected profit for the current quarter.
Advancing issues outnumbered declining ones on the NYSE by 2,185 to 723, for a 3.02-to-1 ratio; on the Nasdaq, 1,872 issues rose and 691 fell for a 2.71-to-1 ratio favoring advancers.
The benchmark S&P 500 index posted 34 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 70 new highs and 24 new lows.
Editing by Bernadette Baum