* Data showed factory deflation in the world's second largest economy eased in July, driven by a rise in global oil prices and as industrial activity climbed back towards pre-coronavirus levels.* The energy sector climbed 1.4% as U.S. crude prices were up 2.1% a barrel, while Brent crude added 1.6%. [O/R]* At 9:42 a.m. ET (1342 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 93.53 points, or 0.57%, at 16,638.01.
* Painted Pony Energy Ltd jumped 14% after Canadian Natural Resources Ltd said it would buy the company for C$461 million ($344.26 million), including debt.
* Canopy Growth Corp gained about 9% after the pot producer reported a smaller-than-expected quarterly loss on Monday.
* The materials sector, which includes precious and base metals miners and fertilizer companies, added 1.4% as gold futures rose 0.8% to $2,026.2 an ounce.[GOL/]
* On the TSX, 164 issues were higher, while 52 issues declined for a 3.15-to-1 ratio favouring gainers, with 16.09 million shares traded.
* The largest percentage gainer on the TSX was Canopy Growth Co, which jumped 10.9%, after the company posted a smaller quarterly loss.
* Its gains were followed by Silvercorp Metals Inc, which rose 5.8%.
* Kinaxis Inc fell 4.4%, the most on the TSX, while the second biggest decliner was Pason Systems Inc, down 3.2%.
* The most heavily traded shares by volume were Baytex Energy Co, Northern Dynasty Minerals Ltd and Northcliff Resources Ltd.
* The TSX posted five new 52-week highs and one new low.
* Across all Canadian issues there were 47 new 52-week highs and five new lows, with total volume of 42.12 million shares.
(Reporting by Shivani Kumaresan in Bengaluru; Editing by Amy Caren Daniel)