* TSX rises 14.29 points, 0.11 percent, to 12,519.10 * TransCanada shares climb 1.7 percent * First Quantum shares fall amid takeover battle. By John Tilak Jan 9 (Reuters) - Canada's main stock index edged higher on Wednesday as optimism on Alcoa Inc's outlook and a rise in TransCanada Corp shares after the company won a large contract were tempered by caution about the outlook for global growth. TransCanada shares rose 2 percent to C$48.20 after the country's largest pipeline operator revealed plans to build a C$5 billion line for Progress Energy Canada in British Columbia. However, the gains in the market were kept in check as investors remained cautious about the fiscal situation in the United States and ahead of policy meetings of European central banks. "It's Alcoa's earnings yesterday that's setting the mood. If the earnings season can show itself as relatively positive or better-than-expected, the mood can really solidify on that," said Serge Pepin, vice president of investment strategy at BMO Asset Management Canada. "Though we've gone through averting the fiscal cliff, investors still feel anxious about the first quarter of this year. Europe has not gone away, although we're seeing some stability there." Spain and Italy will hold their first debt sales of the year on Thursday, revealing the depth of demand for peripheral euro zone debt. The Spanish auction could also offer clues on the timing of a much-anticipated request by the government for international financial aid. At midmorning, the Toronto Stock Exchange's S&P/TSX composite index was up 14.29 points, 0.11 percent, at 12,519.10. Five of the 10 main sectors on the index were trading higher. The materials sector, which includes mining stocks, shed 0.5 percent. Miner Goldcorp Inc was down 1.5 percent, at C$35.27 and Barrick Gold Corp was down 0.7 percent at C$32.92. First Quantum Minerals Ltd was down 1.4 percent at C$21.25 after the Canadian base metal miner took its takeover bid for smaller rival Inmet Mining Corp to the target company's shareholders. The energy sector was little changed as TransCanada's gains were partially offset by a 0.7 percent fall in Enbridge Inc . Oil prices also fell and weighed of the group.