(Updates prices and details throughout)

* TSX up 0.8%

* Investors await payrolls data

By Tharuniyaa Lakshmi

June 4 (Reuters) - Canada's main stock index rose on

Thursday after a ceasefire deal between Israel and Lebanon

raised hopes of de-escalation in the broader U.S.-Iran conflict,

while investors looked ahead to a key payrolls report on

Friday.

At 10:17 a.m. ET, the Toronto Stock Exchange's S&P/TSX

Composite index was down 0.8% at 35,111.81 points.

* Israel and Lebanon agreed to a ceasefire, raising hopes

for a de-escalation between Washington and Tehran, even as Iran

struck Kuwait and U.S. forces hit near the Strait of Hormuz,

underscoring continuing tensions in the months-long conflict.

* The ceasefire deal "is certainly encouraging but U.S. and

Iran remains the bigger conflict, and that is still up in the

air as to how that's going to end up," said Colin Cieszynski,

chief market strategist at SIA Wealth Management.

* The materials group, which includes

metal-mining shares, led gains, up 2.3%, as gold prices climbed

on a weaker dollar and easing concerns over inflation and

interest rate hikes.

* Eight of the 10 TSX sectors were in the green, with

technology and energy the only sectors in

the red, down 0.4% and 1%, respectively.

* The energy sub-index fell after oil prices declined about

3% on hopes for a broader agreement to end the U.S.-Israeli war

with Iran that could lead to a reopening of the Strait of

Hormuz.

* Investors are keeping an eye on domestic and U.S. payrolls

data due at 8:30 a.m. ET on Friday for clues on the health of

the labor market.

* "The street is looking for slow employment growth on both

sides of the border, which would be an improvement for Canada,

where jobs have been declining and recent GDP data has pointed

to a possible recession," Cieszynski said.

* TransAlta Corp ( TAC ) fell 10.7% to the bottom of the

main index after the power producer said on Wednesday it will

acquire two natural gas-fired peaking facilities near Denver,

Colorado, from Blackstone for about $1 billion,

strengthening its presence in the Western U.S. power market.