By Kristina Cooke

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

Walt Disney Company (DIS.N: Quote, Profile, Research), which sold a struggling chain of 313 stores to Children's Place in 2004, is in advanced talks to take back about 220 stores, Children's Place said. Disney confirmed it was in talks to take back stores.

Disney sold its Japan stores in 2002 and considered divesting its European stores, but never found a buyer.

Relations between Disney and Children's Place have been strained lately, as evidenced in securities filings, mainly over Children's Place's failure to meet deadlines for $200 million in refurbishments that were part of the 2004 deal.

Since then, global retail sales for Disney products have risen to $11.5 billion in 2007 from $6.5 billion in 2004 and Disney is now expanding the 120-store European chain.

The Disney Store chain ballooned to 725 stores globally, including 590 in North America, before Disney started selling off and closing stores.

"Today, we have a variety of franchises that are very strong and robust and really broaden our (retail) appeal," Disney Consumer Products spokesman Gary Foster said. "We are in a much stronger ... overall position at retail."

Children's Place, which like many retailers has suffered from a tough U.S. economic environment, 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.