* White House budget scheme stokes bond, dollar bets
* Wall Street stages late bounce, JP Morgan weighs
* Oil rebounds on big gasoline stock decline; gold rises
* Yen slips as Japan downgrades economic outlook (Updates markets with closing Wall Street levels)
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' credit-worthiness and the dollar's reserve status.
Oil jumped 1.5 percent, recovering from two days of losses, after data showed the biggest weekly decline in gasoline inventory since October 1998. For more, see [ID:nLDE73C0V1]
Obama set a time-frame of 12 years or less to reach the goal of $4 trillion in U.S. deficit reduction as he warned that steadily rising debt could cost jobs, harm the economy and force Washington to borrow more from other countries such as China. [ID:nN12216395]
"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.
The yield on benchmark U.S. 10-year government debt fell to the lowest level in a week, while the dollar posted gains versus the yen and euro.
As government leaders wrestle over how to tackle United States' long-term fiscal predicament, investors were reticent to commit to stocks and other risky assets on uncertainties over the durability of global economic and profit growth.
Wall Street ended flat to slightly higher after struggling
much of the session on doubts over corporate profits. An
initial rise in U.S. stocks fizzled, despite strong profit
growth from JPMorgan Chase & Co
The view reined in a rebound in global stocks.
"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 <.DJI> closed up 0.06 percent at 12,270.99, while the Standard & Poor's 500 Index <.SPX> was up 0.02 percent at 1,314.41. The Nasdaq Composite Index <.IXIC> rose 0.61 percent to 2,761.52.
World stocks as measured by MSCI <.MIWD00000PUS> were up 0.3 percent.
Earlier, the FTSEurofirst 300 <.FTEU3>, 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 <.N225> rose 0.9 percent on the day on thin volume.
COMMODITIES STAGE LATE BOUNCE
Like stocks, commodities had a roller-coaster session.
The price of Brent crude oil
U.S. oil prices
Gold
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
The euro
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 [US/]
The benchmark 10-year Treasury yield