President Barack Obama urged Americans on Monday to reject political "absolutism" and partisan rancor as he kicked off his second term with a call for national unity, setting a pragmatic tone for the daunting challenges he faces over the next four years.

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

With second-term expectations tempered by lingering economic weakness and the political realities of a divided Washington, Obama acknowledged the difficult road ahead even as he sought to build momentum from his decisive November re-election victory.

"We cannot mistake absolutism for principle, or substitute spectacle for politics, or treat name-calling as reasoned debate," Obama said as he stood in the wintry cold atop a giant makeshift platform on the Capitol steps overlooking the National Mall.

Looking out on a sea of flags, he spoke to a crowd of up to 700,000 people, less than half the record 1.8 million who assembled four years ago.

Obama 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 battles 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.

SECOND TIME TAKING OATH

When Obama raised his right hand and was sworn in by Supreme Court 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 January 20. Rather than stage the full inauguration on a Sunday, the main public events were put off until Monday.

A second inauguration marked another milestone of political passage for Obama, the Hawaiian-born son of a black father from Kenya and a white mother from Kansas. An electrifying speech at the 2004 Democratic convention as a little-known Illinois state legislator lifted him to the national stage, putting him on a rapid trajectory to the U.S. Senate and a few years later the White House.

Obama, 51, his hair visibly grayed over the past four years, sought to reassure Americans at the mid-point of his presidency and encourage them to help him take care of unfinished business. His wide-ranging speech touched on a variety of issues, including climate change and Middle East democracy uprisings.

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.