* TSX up 50.07 points, or 0.42 percent, at 11,861.52
* Index still on track for sharp fall this week
* Recession in Europe, China transition weigh
* Mining and financial stocks lead broad upsurge
TORONTO, Nov 16 (Reuters) - Canada's benchmark stock index jumped on Friday, led by resource and financial shares, after U.S. politicians made conciliatory statements after holding talks on avoiding the "fiscal cliff" that threatens to drive the economy into recession.
The index had fallen in morning trade, weighed down by signs of global economic weakness, but swung higher after U.S. politicians vowed to find common ground on taxes and spending that could help the world's largest economy avoid what could be debilitating tax hikes and spending cuts.
"It shows you how low our expectations are right now that you can get that kind of a rally just by coming up to a microphone and saying 'hey, we all understand each other'," said Mike Newton, portfolio manager at Macquarie Private Wealth.
"What could be exciting about it is, imagine the rally that will occur when they come out with something very concrete."
At 1:18 p.m. (1818 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 50.07 points, or 0.42 percent, at 11,861.52. It was still on track for its sharpest weekly drop since May, however.
Earlier in the day, investors drove down shares in reaction to signs that barriers to a robust global recovery remain, especially data on Thursday showing Europe's debt crisis had dragged the euro zone back into recession.
A lackluster U.S. earnings season and China's leadership transition also weighed.
STRONG RALLY POTENTIAL
But Rick Hutcheon, president and chief operating officer at RKH Investments, said valuations have become cheap and that it would take little for the index to bounce higher in coming weeks.
"If there is any glimmer of good news the market has a very strong rally potential," he said, speaking before the U.S. legislators made their comments.
Major miner Barrick Gold Corp led the index's rise, up 2 percent at C$33.96, while BCE Inc gained 1.6 percent to C$42.03 as it continues to work with acquisition target Astral Media Inc to get a deal past regulators. Astral rose 4.8 percent to C$44.27.
Royal Bank of Canada added 0.7 percent to C$55.44, and miner Centerra Gold Inc jumped 12 percent to C$9.46.
Fertilizer company Potash Corp was the most heavily weighted decliner, dropping 1 percent to C$37.29, while Niko Resources Ltd skidded to a 52-week low, tumbling more than 10 percent to C$8.33, after the oil company announced stock and convertible debt offerings.