MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.9%, as Kospi gained 2.1% to hit ​a new record high

Stocks rebounded in early trading in Asia on Tuesday as markets took heart ​from reports Iran is considering attending peace talks with the U.S. in Pakistan, with renewed bets on AI underpinning demand.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.9%, as Kospi gained 2.1% to hit ​a new record high for the first time since the Iran war began. S&P 500 e-mini futures were up 0.1%, while ​Brent crude slid 0.4% to $95.09 a barrel.

Nikkei 225 tacked on 1.2%, while Australian shares bucked the trend, sliding ⁠0.3%.

An uneasy ceasefire between Iran and the U.S. frayed after the latter announced the seizure of an Iranian cargo ship, drawing vows of ​retaliation from Tehran. Iran said over the weekend it would skip a second round of negotiations, though a senior official later told Reuters it may yet send delegates to talks expected in Islamabad.

Adding to the uncertainty, the U.S. vice president remained in the U.S. on Monday, a separate source told Reuters, denying reports he was already on his way to Pakistan for talks.

The renewed tensions had reignited a surge in oil prices overnight as traffic through the Strait ​of Hormuz remained largely paralysed.

While potential talks in Islamabad remain likely, rhetoric from Washington and Tehran continued to point to fragile and strained ​negotiations, analysts from Westpac wrote in a research report.

Elsewhere, investors ‌were also keeping their eyes on a U.S. Senate confirmation hearing later for Kevin Warsh, the president’s nominee to lead the country’s central bank, which the president has repeatedly criticised for failing to cut rates sooner and more aggressively.