* Wall Street struggles, drags on global stock markets
* Yen slips as Japan downgrades economic outlook
* Oil rebounds from recent losses; gold rises
(Recasts lead, updates market action)
By Richard Leong
NEW YORK, April 13 (Reuters) - U.S. bonds and the dollar
rose on Wednesday on hopes that President Barack Obama's $4
trillion deficit reduction plan would shore up the United
States' creditworthiness and the dollar's reserve status.
The yield of benchmark U.S. 10-year government debt fell to
its lowest level in a week, while the dollar was up 0.2 percent
against the yen and 0.4 percent higher versus the euro.
Obama set a time-frame of 12 years or less to reach the
goal of $4 trillion in deficit reduction as he warned that
steadily rising debt could cost jobs and harm the economy, and
force the country to borrow more from other countries such as
China. []
"It's a positive from a credit and currency perspective.
It's positive in the sense that the U.S. can (better) meet its
obligations," said James Caron, global head of rates research
at Morgan Stanley in New York.
As government leaders wrestle over how to tackle United
States' long-term fiscal predicament, investors were reticient
to commit to stocks and other risky assets on uncertainties
over the durability of global economic and profit growth.
Wall Street struggled on doubts over corporate profits,
curbing a rebound in global stocks, while commodity prices
clung to gains after a steep two-day sell-off.
An initial rise in U.S. stocks fizzled, despite strong
profit growth from JPMorgan Chase & Co <JPM.N>, the No. 2 U.S.
bank. Analysts questioned whether the results from JPMorgan,
the first major Wall Street bank to report this quarter, were a
one-time win or would translate to others' performance.
"People are getting the sense that no matter what these
companies say, the easy money has already been made so it will
be tough to see further upward movement," said Rick Fier, vice
president at Conifer Securities in New York, which has about $7
billion in assets under administration.
The Dow Jones industrial average <> was down 0.17
percent at 12,243.33, while the Standard & Poor's 500 Index
<.SPX> was down 0.22 percent at 1,311.30. The Nasdaq Composite
Index <> was up 0.19 percent at 2,750.02.
World stocks as measured by MSCI <.MIWD00000PUS> were up
0.1 percent.
Earlier, the FTSEurofirst 300 <>, the index of
Europe's top shares, closed up 0.7 percent, a day after posting
its biggest one-day fall in a month. Bank shares rose, boosted
by the JPMorgan results.
Japan's Nikkei index <> rose 0.9 percent on the day in
thin volume,
COMMODITIES STAGE LATE BOUNCE
Commodity markets had a roller-coaster session.
The price of Brent crude oil <LCOc1> was up nearly $2 near
$123 a barrel after a two-day sell-off caused by worries that
high prices would crimp demand. U.S. oil prices <CLc1> were on
track to end higher at $107.07, erasing mid-afternoon losses.
Gold rose $3 to end at $1,457 an ounce, after rising as
high $1,462 on a weaker dollar earlier.
The dollar rebounded against the yen after the Japanese
government lowered its economic outlook to reflect last month's
devastating earthquake and tsunami, its first downgrade in six
months. The dollar was up 0.3 percent at 83.83 yen <JPY=>, a
day after the greenback recorded its biggest one-day percentage
drop in four months. []
The euro <EUR=> was down 0.3 percent at $1.4437, after
earlier hitting a 15-month peak of $1.4521 on EBS trading
platform.
Overall sentiment toward the greenback, however, remains
largely bearish given expectations the U.S. Federal Reserve
will significantly lag global central banks in raising interest
rates.
In bond trading, U.S. government debt prices rose, erasing
earlier losses, despite weaker-than-expected results at a $21
billion auction of 10-year notes. For more, see []
The benchmark 10-year Treasury yield <US10YT=RR> hit a
one-week low at 3.48 percent. For more, see []
(Additional reporting by Ryan Vlastelica, Gertrude
Chavez-Dreyfus and Gene Ramos in New York; Jeremy Gaunt and Jan
Harvey in London; Editing by Leslie Adler)
