Dubai: Global markets regained their footing on Tuesday as investors cautiously warmed to riskier assets, as no fresh escalation in tensions were reported from the Middle East.

Market players around the globe also reassessed the risk of an all-out conflict between the two countries after the killing of Tehran’s top general in a US air strike on Friday set off a bout of risk aversion.

The Stoxx Europe 600 Index tracked Monday’s gains on Wall Street after a strong session for Asian equities. The S&P 500 regained its losses and closed 0.4 per cent higher on Monday.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.3 per cent, after a 0.7 per cent drop in the previous session. Asian markets recovered after prior-day losses, led by gains from China, Hong Kong, Japan and South Korea. Australia’s S&P/ASX 200 jumped 1.35 per cent.

“In the instant gratification world we live in, a lack of immediate action by Iran has, in fact, seen the haven momentum wane overnight,” Jeffrey Halley, a senior market analyst for Asia Pacific at OANDA, wrote in a client note.

Investors will now looking forward to the signing of a Phase 1 trade deal between the United States and China on January 15, after the cooling of trade tensions between both sides earlier last month.

Regional rebound

Regional markets bounced back and traded higher, putting an end to steep losses seen until a day earlier. The Dubai bourse’s main index DFM gained about 2 per cent after dropping over 3 per cent at the start of the week on news of escalating US-Iran tensions. Abu Dhabi’s ADX gained 1 per cent.

“Markets are still on edge in response to the escalation in tensions between the US and Iran but have begun to look outside the region for more direction,” said Edward Bell, commodity analyst at Emirates NBD. “Regional assets remain in focus but across the Middle East and North Africa, domestic equity indices showed a mixed performance while UAE bond spreads over benchmarks widened.”

Emerging market stocks too made a comeback on Tuesday MSCI’s index for developing world stocks rose 0.4 per cent after falling for two straight days.

India’s market benchmark Sensex closed 193 points, or 0.47 per cent, up, while Nifty ended the day at 12,052.95, up 60 points, or 0.50 per cent. Pakistan’s benchmark index gained 430 points on Tuesday, a day after it lost more than 820 points during trading.

Crude headed for the first decline in four days. Brent fell as much as 1.5 per cent to $67.86 a barrel, before settling down 0.9 per cent at $68.26.