By John Tilak

TORONTO, Dec 5 (Reuters) - Canada's main stock index nudged

higher on Wednesday, as investors cheered a cost-cutting plan at

Canadian Pacific Railway Ltd and energy stocks rose on

optimism about Chinese growth, while gold miners fell.

Canadian Pacific Railway gained 4.1 percent to C$96.82 after

the country's second-biggest railroad said it plans to cut 4,500

jobs by 2016 as part of a drive by its new chief executive to

slash costs.

'This is what shareholders have been looking for. This is

what they have been hoping - that CP will face the challenges

that they have. The new CEO is making his mark,' said Fred

Ketchen, director of equity trading at ScotiaMcLeod.

The Toronto Stock Exchange's S&P/TSX composite index closed up 20.11 points, or 0.17 percent, at 12,157.29.

Energy stocks notched the broadest gains as hopes about

China's economic growth were bolstered after Communist Party

chief Xi Jinping said the country's leaders will maintain their

fine-tuning of economic policies in 2013.

Suncor Energy Inc gained 1.3 percent to C$32.68, and

Canadian Natural Resources Ltd advanced 1.3 percent to

C$27.78.

'There are expectations of better global growth, driven by

ongoing U.S. budget talks and speculation that the Chinese

economy is turning around for the better,' said Elvis Picardo, a

strategist at Global Securities in Vancouver.

'There is also some degree of takeover speculation. Many

Canadian energy producers are trading at pretty attractive

valuations. The M&A activity in the U.S. certainly points to the

attractiveness of energy assets in North America,' Picardo said.

U.S. miner Freeport-McMoRan Copper & Gold Inc on

Wednesday made a combined $9 billion move on Plains Exploration

& Production Co and McMoRan Exploration Co to

diversify into the U.S. energy sector.

Also on Wednesday, Canada said its Dec. 10 deadline for

ruling on a bid by China's CNOOC Ltd for Nexen Inc could be extended.

Nexen shares dipped after the comments, but still closed up

0.4 percent at C$24.26.

Investors have been eagerly awaiting a Canadian decision on

whether to approve two takeovers of domestic energy companies by

foreign state-owned enterprises.

Gold miners had another tough day, accounting for seven of

the eight heaviest drags on the index, as bullion fell to a

one-month low and Goldman Sachs lowered its price forecast for

the precious metal.

Canada's gold mining sub-sector has fallen more than 16

percent so far this year.

Goldcorp Inc shed 3.3 percent to C$36.61, Barrick

Gold Corp fell 2.4 percent to C$33.12, and Eldorado

Gold was down 4.5 percent at C$13.26. The index's

materials sector, which includes mining stocks, lost 1.4

percent.

In company news, shares of Primaris Retail REIT

rose 14.6 percent to C$26.40 after a consortium led by Canada's

KingSett Capital offered about C$2.6 billion ($2.6 billion) to

acquire the Canadian shopping mall owner.

Overall equity momentum may be muted as the year draws to a

close.

'I don't see a year-end bounce, if anything there is a

year-end fall, a slight decline,' said Vincent Delisle, an

investment strategist at Scotiabank. 'I'm not looking for a

Santa Claus rally,' he added, pointing to tortuous U.S. budget

negotiations as the biggest overhang.

Delisle said he sees the benchmark S&P/TSX index rising to

12,800 next year and recommended investors be overweight in the

energy, materials and industrials sectors, and underweight in

consumer discretionary, financial, telecom and utility stocks.

($1=$0.99 Canadian)

(Additional reporting by Alastair Sharp; Editing by Leslie

Adler)

((john.tilak@thomsonreuters.com)(1-416-687-7918)(Reuters

Messaging: john.tilak.reuters.com@reuters.net))

(============================================================== FOR CANADIAN MARKETS NEWS, CLICK ON CODES IN BRACKETS: TSX market report........................................ Canadian dollar and bonds report................... Reuters global stocks poll (Canada)... Top News: Canada .................................... FOR CANADIAN MARKETS DATA............................. )

COPYRIGHT

Copyright Thomson Reuters 2012. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.