The pan-European STOXX 600 index rose 0.1 per cent, adding to Monday’s 1.1 per cent gains.
North Korea’s leader Kim Jong Un received a report from his army on its plans to fire missiles towards the U.S. Pacific territory of Guam and said he would watch the actions of the United States for a while longer before making a decision, the North’s official news agency said on Tuesday.
“There is a more relaxed attitude being taken towards the Korean situation in markets. With the report North Korea has put its plans on hold, there is a sense of stepping back from the brink,” Rabobank analyst Lyn Graham-Taylor said.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.1 per cent higher in afternoon trade, with Australia up 0.5 per cent. South Korea’s markets were closed for a holiday.
Japan’s Nikkei stock index closed up 1.1 per cent, boosted by the weaker yen, a day after skidding 1 per cent to its lowest since early May.
U.S. stocks futures were higher, indicating Wall Street would open higher later in the day .
On Monday the S&P 500 rose 1.0 per cent, led by technology stocks, in its biggest daily percentage rise since April.
Assets that generally do well in time of market or geopolitical turbulence were among fallers on Tuesday.
The yen, which tends to gain on expectations Japanese investors will repatriate assets in a crisis, fell 0.6 per cent to 110.32 per dollar.
“We have North Korea saying they will wait, and Trump not saying anything at all, compared to his past promise of ‘fire and fury,’” said Mitsuo Imaizumi, chief FX strategist at Daiwa Securities.
“That added up to good news for the dollar, bad news for the yen,” he said.
The Swiss franc, which gained 1.1 per cent on Aug. 9 as the war of words over the Korean peninsula intensified, fell 0.2 per cent to 0.9736 per dollar. This followed a 1.1 per cent fall on Monday.
The euro was down 0.4 per cent at $1.1733, helping push the dollar index, which measures the greenback against a basket of currencies, up 0.4 per cent.
The dollar was also helped by comments from New York Federal Reserve President William Dudley, who told the Associated Press he would favour a third increase in Fed interest rates this year if the economy developed as he expected..
In debt markets, yields on low-risk German and U.S. government bonds rose.
German 10-year yields, the benchmark for euro zone borrowing costs, rose 1.7 basis points to 0.42 per cent, having fallen to as low as 0.38 per cent on Friday.
U.S. 10-year Treasury yields rose 3 bps to 2.47 per cent, up from a six-week low of 2.18 per cent touched on Friday.
Gold, viewed as a safe haven for investors in troubled times, fell 0.6 per cent to $1,274 an ounce.
Oil prices steadied somewhat after falling more than 2.5 per cent on Monday to its lowest in about three weeks on the strength of the dollar and reduced refining in China.
Brent crude, the international benchmark, was last down 2 cents at $50.71 a barrel.