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* TSX at 129.91 points, or 1.02 percent, at 12,859.25 * Potential for break in U.S. impasse boosts equities * Canadian Natural Resources up 3 pct after Horizon update By Alastair Sharp TORONTO, Oct 10 (Reuters) - The main Canadian stock index jumped in early trading on Thursday as investors bet U.S. lawmakers would reach agreement to avoid a potentially calamitous debt default. The Toronto Stock Exchange's S&P/TSX composite index gained more than 1 percent, matching similar jumps in the three main U.S. indices, in a broad-based rally led by financial and energy stocks. House Republicans are considering agreeing to a short-term increase in the government's borrowing authority, according to a Republican leadership aide, keeping a possible default after Oct. 17 at bay and buying time for negotiations on broader policy measures. A debt default by the United States, the world's biggest borrower and Canada's top trading partner, would roil world markets, raise borrowing costs, hurt the dollar and throw U.S. and world economies into a recession. "People feel the Republicans will cave, which I'm sure they will, as we get closer and closer to the 17th," said Paul Harris, portfolio manager at Avenue Investment Management. "The Republicans are not going to want to be the party that puts the United States into default." A debt default by the United States, the world's biggest borrower, would roil world markets, raise borrowing costs, hurt the dollar and throw U.S. and world economies into a recession. The Canadian index was up 129.91 points, or 1.02 percent, at 12,859.25 by mid-morning. The single biggest positive impact came from Canadian Natural Resources Ltd, which jumped 3 percent to C$32.98 after saying its Horizon oil sands project would likely be under budget. Three banks were among the top five performers, with Royal Bank of Canada up 1 percent at C$67.05, Toronto-Dominion Bank gaining 0.9 percent at C$91.86, and Bank of Nova Scotia adding 0.9 percent to C$59.48.