* British PM May battles to save Brexit deal and her job
* World stocks gauge rises after five-day losing streak
* Wall Street surges on trade optimism
* Oil rebounds on lower U.S. stockpiles (Updates with close of U.S. trading)
By Lewis Krauskopf
NEW YORK, Nov 15 (Reuters) - A gauge of global stocks climbed on Thursday after five sessions of declines as Wall Street surged on trade optimism, while sterling tumbled as political developments in Britain rippled through markets.
Oil prices rose modestly, as the commodity recouped some losses from a recent steep plunge.
U.S. stock indexes surged after a Financial Times report that U.S. Trade Representative Robert Lighthizer has told some industry executives that another round of tariffs on Chinese imports has been put on hold as the two nations pursue talks.
A spokesperson for Lighthizer later denied the report, one of several news developments involving trade during the day that swung stocks.
“The market right now is just very reactionary," said Walter Todd, chief investment officer with Greenwood Capital in Greenwood, South Carolina. "One headline turns the Dow around 400 points. It speaks to the sensitivity around the issue.”
The Dow Jones Industrial Average rose 208.77 points, or 0.83 percent, to 25,289.27, the S&P 500 gained 28.62 points, or 1.06 percent, to 2,730.2 and the Nasdaq Composite added 122.64 points, or 1.72 percent, to 7,259.03.
Investors are now focusing on the G20 meeting later this month, when leaders of the United States and China are expected to meet, and the Federal Reserve meeting in December, following investor optimism that recent inflation data may cause the central bank to be less aggressive with rate hikes.
"In terms of catalysts for the rest of the year, we have the G20 meeting and we have the Fed meeting," said Sunitha Thomas, regional portfolio adviser at Northern Trust Wealth Management. "Now that we have finished earnings, that is pretty much what everyone is focused on."
In Britain, Prime Minister Theresa May vowed to fight for her draft divorce deal with the European Union after the resignation of her Brexit secretary and other ministers put her strategy and her job in peril.
Sterling was last trading at $1.2775, down 1.69 percent on the day, and also fell steeply against the euro.
The pan-European STOXX 600 index lost 1.06 percent, while Britain's FTSE 250 dropped 1.3 percent.
"The Brexit news acted as a catalyst ... I think that what investors are acting upon is uncertainty," said Stephane Barbier de la Serre, a strategist for Makor Capital Markets.
MSCI's gauge of stocks across the globe gained 0.66 percent, after five sessions of losses.
The dollar index, which measures the greenback against a basket of currencies, rose 0.26 percent, with the euro up 0.18 percent to $1.1328.
Benchmark U.S. 10-year notes last rose 2/32 in price to yield 3.114 percent, from 3.12 percent late on Wednesday.
Oil futures rose for the second consecutive session after this week's steep losses as U.S. fuel stockpiles declined and a possible cut in OPEC output helped support prices.
U.S. crude rose 0.37 percent to settle at $56.46 a barrel, and Brent settled ay $66.62 a barrel, up 0.76 percent.
Additional reporting by Josephine Mason in London; Editing by Nick Zieminski and Cynthia Osterman