CANADA STOCKS-TSX gains as stalling U.S. talks boost gold miners


* TSX up 39.35 points, or 0.31 percent, at 12,931.46

* Lack of progress in U.S. debt negotiations boosts bullion,gold miners

* Lower commodity prices weigh on resource-rich Canada index

By Alastair Sharp

TORONTO, Oct 15 (Reuters) - Canada's main stock index gainedon Tuesday, as shares of gold miners jumped after U.S.negotiations to avert a damaging debt default stalled.

Bullion had hit a three-month low earlier in the day asinvestors bet that a deal could be reached. But as negotiationssputtered ahead of a Thursday deadline, a safe-haven rally forgold in turn boosted Canada-listed gold miners.

"Many of the leading (gold mining) stocks have been beatendown beyond belief, are trading at very attractive valuationsand they offer good dividend yields," said Elvis Picardo, astrategist at Global Securities in Vancouver.

The gold mining sub-index, which has declined sharply inrecent months, gained more than 3 percent.

Other commodities, including oil, were lower, while thethree main U.S. indices also retreated in the face of thepolitical uncertainty.

The resource-heavy Toronto Stock Exchange's S&P/TSXcomposite index ended up 39.35 points, or 0.31percent, at 12,931.46.

Picardo said the index should be well-placed to gain in themedium-term, assuming a deal is reached that avoids a U.S.default.

"Investors are just waiting for this one big uncertainty tobe resolved before they jump in with both feet," he said,pointing to energy and mining stocks as likely winners.

Hopes for a deal had risen after U.S. Senate Majority LeaderHarry Reid, a Democrat, and his Republican counterpart, MitchMcConnell, ended a day of talks on Monday with Reid saying theyhad made "tremendous progress."

"I suspect something will happen on the positive side (inU.S. fiscal negotiations) but in the meantime the market is verynervous," said Irwin Michael, portfolio manager at ABC Funds.

Barrick Gold Corp gained 3.7 percent to C$18.46,while Goldcorp Inc added 2.2 percent to C$24.97.

Pipeline operator Enbridge Inc declined 1 percentto C$42.55, while Talisman Energy Inc fell 1.5 percentto C$12.52.

BlackBerry Ltd gained 1.8 percent to C$8.50. Thestruggling smartphone company on Tuesday issued an open letterin newspapers to its customers and partners in a bid to reassurethem.

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