said on Wednesday that Washington should find a short-term solution to avoid the fiscal cliff and then work on a substantive debt reduction plan in 2013.
The U.S. sovereign credit rating will not be affected for the time being as Moody's Investors Service said on Wednesday it will hold off on its judgment of whether to cut the rating until after the 2013 budget process is completed.
EURO FACES GLOOM
The euro stayed pressured at $1.2753, although it was off Wednesday's two-month low of $1.2736.
Sentiment was dented by a gloomy outlook for Europe after the European Commission said the euro zone economy would barely grow next year.
Greece's parliament narrowly voted to approve an austerity package early on Thursday to unlock vital aid and avert bankruptcy, despite internal rifts in both ruling New Democracy and PASOK parties and violent demonstrations.
The Greek vote is gone by, the flash Obama panic has forced ... investors to close down their positions to lock in profits, said Societe Generale analyst Sebastien Galy in a note to clients. We are left with the usual story of flatter US Treasuries helped by renewed reserve activity.
The European Central Bank holds its policy meeting later in the day, and is expected to keep interest rates unchanged.
The Chinese congress started on Thursday to usher in a once-in-a-decade leadership change against a backdrop of growing social unrest, public anger at corruption and a yawning gap between rich and poor.
Oil rebounded after tumbling more than $4 on Wednesday amid concerns about weak demand for fuel as the U.S. and European economies face the risk of a prolonged slowdown.
U.S. crude rose 0.5 percent to $84.84 a barrel, after settling at its lowest level since July at $84.44 while Brent also rose 0.5 percent to $107.31.
Sluggish equities sapped sentiment in Asian credit markets, widening the spread on the iTraxx Asia ex-Japan investment-grade index by 5 basis points.