UPDATE 5-Confident Obama lays out battle plan as he launches second term
* Obama takes oath of office for second time in 24 hours
* President seeks to build momentum after re-election win
* Partisan fights on budget, gun control, immigration await
WASHINGTON, Jan 21 (Reuters) - A confident President Barack Obama kicked off his second term on Monday with an impassioned call for a more inclusive America that rejects partisan rancor and embraces immigration reform, gay rights and the fight against climate change.
Obama's ceremonial swearing-in at the U.S. Capitol was filled with traditional pomp and pageantry, but it was a scaled-back inauguration compared to the historic start of his presidency in 2009 when he swept into office on a mantle of hope and change as America's first black president
Despite expectations tempered by lingering economic weakness and a divided Washington, Obama delivered a preview of the second-term priorities he intends to pursue, declaring Americans "are made for this moment" and must "seize it together."
His hair visibly gray after four years in office, Obama called for an end to the political partisanship that marked much of his first term in the White House in bitter fights over the economy with Republicans.
"We cannot mistake absolutism for principle, or substitute spectacle for politics, or treat name-calling as reasoned debate," Obama said from atop the Capitol steps overlooking the National Mall.
Looking out on a sea of flags, Obama addressed a crowd estimated to be up to 700,000 people - less than half the record 1.8 million who assembled four years ago.
Speaking in more specific terms than expected in a nearly 20-minute inaugural address, he promised "hard choices" to reduce the federal deficit and called for a revamping of the tax code and a remaking of government.
The Democrat arrived at his second inauguration on solid footing, with his poll numbers up, Republicans on the defensive and his first-term record boasting accomplishments such as a U.S. healthcare overhaul, ending the war in Iraq and the killing of Osama bin Laden.
But fights are looming over budgets, gun control and immigration, with Republicans ready to oppose him at almost every turn and Obama still seemingly at a loss over how to engage them in deal-making. Obama, however, is sounding more emboldened because he never again needs to run for election.
SECOND TIME TAKING OATH
When Obama raised his right hand and was sworn in by Chief Justice John Roberts, it was his second time taking the oath in 24 hours - but this time with tens of millions of people watching on television.
The president beamed as chants of "Obama, Obama!" rang out from the crowd.
Obama had a formal swearing-in on Sunday at the White House because of a constitutional requirement that the president take the oath on Jan. 20. Rather than stage the full inauguration on a Sunday, the main public events were put off until Monday.
It was another political milestone for Obama, the Hawaiian-born son of a black father from Kenya and a white mother from Kansas.
Obama, 51, sought to reassure Americans at the mid-point of his presidency and encourage them to help him take care of unfinished business. "Preserving our individual freedoms ultimately requires collective action," he said.
Enthusiastic crowds still turned out on the National Mall but the euphoria of 2009 was gone.
"Four years ago it was the first black president," said local resident Greg Pearson, 42. "It doesn't have the same energy. It's more subdued. It's not quite the party it was four years ago. Our expectations are pretty low (this time): let's not default on the national debt, keep the government running."
Touching on the kind of volatile issues rarely mentioned in inaugural speeches, Obama ticked off a series of liberal causes he plans to push in this second term.
Most surprising was a relatively long reference to the need to address climate change, which he mostly failed to do in his first four years.
"We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations," the president said.
On gay rights, Obama insisted: "Our journey is not complete until our gay brothers and sisters are treated like anyone else under the law."
And in a nod to America's fast-growing Hispanic population that helped catapult him to re-election in November, he said there was a need to "find a better way to welcome the striving, hopeful immigrants who still see America as a land of opportunity."
MUST FACE PERSISTENT PROBLEMS
Obama, who won a second term by defeating Republican Mitt Romney after a bitter campaign, opened round two facing many of the same problems that dogged his first term: persistently high unemployment, crushing government debt and a deep partisan divide. The war in Afghanistan, which Obama is winding down, has dragged on for over a decade.
He won an end-of-year fiscal battle against Republicans, whose poll numbers have continued to sag, and appears to have gotten them to back down, at least temporarily, from resisting an increase in the national debt ceiling.
And Obama faces a less-dire outlook than he did when he took office in 2009 at the height of a deep U.S. recession and world economic crisis. The economy is growing again, though slowly.
But he still faces a daunting array of challenges.
Among them is a fierce gun-control debate inspired by a school massacre in Newtown, Connecticut, last month, a tragedy he invoked in his speech.
He said America must not rest until "all our children, from the streets of Detroit to the hills of Appalachia to the quiet lanes of Newtown, know that they are cared for, and cherished, and always safe from harm."
Obama's appeals for bipartisan cooperation will remind many Americans of his own failure to meet a key promise when he came to power - to act as a transformational leader who would fix a dysfunctional Washington.
His speech was light on foreign policy, with no mention of the West's nuclear standoff with Iran, the civil war in Syria, dealings with an increasingly powerful China or confronting al Qaeda's continued threat as exemplified by the recent deadly hostage crisis in Algeria.
But Obama said: "We will show the courage to try and resolve our differences with other nations peacefully ... We will support democracy from Asia to Africa; from the Americas to the Middle East, because our interests and our conscience compel us to act on behalf of those who long for freedom."
Obama's ceremonial swearing-in fell on the same day as the national holiday honoring slain civil rights leader Martin Luther King Jr. - and the president embraced the symbolism.
He took the oath with his hand on two Bibles - one from President Abraham Lincoln, who ended slavery, and the other from King. Myrlie Evers-Williams, widow of slain civil rights figure Medgar Evers, was given the honor of delivering the invocation at the ceremony.