By Kristina Cooke

NEW YORK (Reuters) - Retailer Children's Place (PLCE.O: Quote, Profile, Research) on Thursday said it was exiting the Disney Stores in North America and would reduce spending and cut jobs, sending its shares up more than 12 percent.

The children's retailer said it is in advanced talks with The Walt Disney Company (DIS.N: Quote, Profile, Research) for the company to regain ownership of two-thirds of the Disney Store chain. Disney confirmed it was in discussions about the potential deal.

Children's Place, which like many retailers has suffered from a tough economic environment that has made consumers more reluctant to spend, said it would cut 80 jobs of its shared-services workforce and not fill 50 open positions as part of the plan to exit the Disney Stores business.

The company also said it sees capital spending down by more than half in fiscal 2008 and said its inventory per square foot would be flat to lower in the first quarter.

"All the actions they've announced today are positive. Most importantly: the exit from the Disney store -- it was a drain -- the cutback in capital spending, the inventory strategy, and the job cuts," said Sterne Agee analyst Margaret Whitfield.

Children's Place also on Thursday posted a net loss for the fourth quarter, compared with a year-ago net gain, hurt mostly by one-time charges related to its exit of the Disney Store.

The company reported a quarterly net loss of $58.5 million, or $2.01 per share, compared with a net profit of $44.7 million, or $1.48 per share, a year earlier.

While Children's Place posted a gain when one-time items were excluded, they still fell short of analysts' average estimates.