* 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. [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.
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
"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> 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 <.IXIC> 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 <.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 in thin volume,
COMMODITIES STAGE LATE BOUNCE
Commodity markets had a roller-coaster session.
The price of Brent crude oil
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
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