* Risk appetite returns, helps global equities
* Yen slips as Japan downgrades economic outlook
* Oil rebounds from recent losses, gold rises
* U.S. President's speech on budget plan on tap
(Updates market action, adds quote, byline)
By Richard Leong
NEW YORK, April 13 (Reuters) - Global markets rebounded
from a sharp sell-off on Wednesday and the yen slipped after
Japan scaled back its economic outlook due to last month's
earthquake, tsunami and nuclear plant disaster.
Commodity prices reversed a steep two-day decline, with oil
leading the way after data showed the largest weekly fall in
gasoline stocks since 1998. The energy sector was a top driver
for U.S. stocks as they snapped a four-day losing streak as
measured by the S&P 500 index.
Crude oil prices rose above $122 a barrel, rebounding from
a two-day sell-off caused by worries that high prices will
crimp demand, while gold firmed on a weaker U.S. dollar.
Financial stocks fell though after U.S. bank J.P. Morgan
<JPM.N> reported strong earnings that largely came from
one-time items, raising questions about its outlook.
World stocks as measured by MSCI <.MIWD00000PUS> were up
0.5 percent for a 4.5 percent year-to-date gain. Much of the
gain came from emerging markets <.MSCIEF>, which gained more
than 0.6 percent.
"Economic fundamentals are supportive for stocks and
commodities, which are all predicated on global growth," said
Mark Luschini, chief market strategist at Janney Montgomery
Scott based in Philadelphia.
U.S. President Barack Obama is due to speak at about 1:30
p.m. (1730 GMT) to outline his plan for tackling the long-term
U.S. deficit and debt in a speech in which he is expected to
push for higher taxes for the rich and changes to government
pension and healthcare plans. []
The dollar has weakened against most major currencies this
year on concerns over the huge $1.5 trillion federal budget.
The U.S. dollar, however, has firmed versus the yen since
late March as Japan faces the daunting task of rebuilding after
the ravaging quake and tsunamis that hit the country last
month.
The benchmark Nikkei index <> rose 0.9 percent on the
day in thin volume. Analysts suggested the full impact of the
country's disasters, as outlined in the government's new
assessment, was still not clear.
A Bank of America-Merrill Lynch fund manager poll Tuesday
showed investors rapidly cutting their exposure to Japanese
equities, although some big firms have been buying.
In Europe, the FTSEurofirst 300 <> rose 0.8 percent,
rebounding from its biggest one-day fall in a month Tuesday.
YEN FALLS, EURO RISES
The yen slipped broadly after the Japanese government
downgraded its outlook for the economy for the first time in
six months. []
The euro touched a new 15-month high against the dollar at
$1.4521 on EBS trading platform.
The prospect of further interest rate rises by the European
Central Bank while monetary policy stays loose in the U.S. and
Japan continued to buoy the single currency.
The dollar was up about 0.6 percent at 84.02 yen after
sliding more than 1.2 percent Tuesday for its biggest one-day
percentage drop in four months. []
"If there is no pullback in oil and other commodity prices
then I think going forward the yen will be very vulnerable,"
said Niels Christensen, currency strategist at Nordea in
Copenhagen.
In bond trading, Bund futures <FGBLc1> were flat after a
rally in the previous session, while U.S. government debt
prices fell after March data on domestic retail sales were not
as weak as some traders had bet on.
The U.S. Treasury will sell $21 billion in 10-year notes
later Wednesday. For more, see []
(Additional reporting by Angela Moon in New York; Jeremy
Gaunt, Brian Gorman, Jessica Mortimer, Barbara Lewis, Jan
Harvey in London)
