By Selena Li

HONG KONG (Reuters) – Asian stocks regained some composure on Tuesday as the massive selling that rocked financial markets after Russia’s invasion of Ukraine last week paused for breath, while surging crude prices supported oil exporters in the region.

Global stock markets have tumbled in recent days following Russia’s invasion of Ukraine and Western sanctions, which include cutting off some of Russia’s banks from the SWIFT financial network and limiting Moscow’s ability to deploy its $630 billion foreign reserves.

High-level talks between Kyiv and Moscow on Monday ended with no agreement except to keep talking, but Asian markets stabilised on signs of no immediate escalation of sanctions.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.42% and Japan’s Nikkei jumped 1.47%. The Russian rouble regained some footing after crashing to an all-time low, while the safe-haven dollar resumed its rise against major peers.

Australia’s S&P/ASX 200 index rose 0.92%, paring earlier gains. The country’s central bank decided to keep the official cash rate at a record low.

The Reserve Bank of Australia said “the war in Ukraine is a major source of uncertainty,” and that it would maintain “highly supportive monetary conditions” while monitoring inflation.

“A lot of what’s been happening in markets is obviously overshadowed by the news around Ukraine and Russia in terms of negotiations, but the significant drivers are going to be the response from governments and central banks in terms of the policy settings,” said Kerry Craig, global market strategist at J.P. Morgan Asset Management.

“The markets are going to focus on the broader implications of what’s going to happen around energy prices, what that means for inflation across parts of the world,” he said.

Brent crude futures, on Tuesday rose 0.91% to $98.86 per barrel.

The benchmark touched a seven-year high of $105.79 after Russia’s invasion of Ukraine last week, though markets calmed as the United States and allies discuss a coordinated release of crude stocks.

The risks of a further energy shock have helped Southeast Asian oil exporters with Indonesian stocks hitting record high on Tuesday, up as much as 1.6%, with coal and energy companies among the biggest gainers.

Malaysia’s bourse dipped slightly, albeit after days of sharp gains.

“We are positive on select ASEAN markets, primarily the oil-exporters that should be more resilient in an elevated energy-price environment,” Ronald Chan, Chief Investment Officer, Asia ex-Japan equities at Manulife Investment Management, said in a research note.

“Additionally, any slowdown in the pace of rate hikes due to the military conflict would also benefit emerging markets in Asia,” Chan added.

The Federal Reserve is poised to raise interest rates at its meeting this month, with policymakers publicly sparring about whether a large 50 basis point hike is necessary.

Atlanta Fed President Raphael Bostic said on Monday he was in favour of a 25 basis point rise, but could consider a 50 basis point move if economic data between now and then shows high inflation persisting.

The bearish outlook continued to weigh on European futures, with Euro stoxx futures down 0.83%. European markets tumbled on Monday, led by banking shares amid concerns lenders may take a big hit from powerful Western sanctions against Russia.

Benchmark 10-year U.S. Treasury yields were at 1.8560%, gradually walking back a little ground from Monday’s tumble.

The euro resumed its decline, dropping 0.2% to $1.1197, but well off the low of $1.1121 from the previous session.

Russia’s rouble steadied after plunging as much as 30% to a record 120 per dollar after Western countries and their allies slapped Russia with new sanctions. It later clawed back some losses to 101 per dollar, following action by Russia’s central bank.

Spot gold was 0.1% lower at $1,906 an ounce, having risen as high as 1,973.96 last week.

(Reporting by Selena Li and Alun John in Hong Kong; Editing by Simon Cameron-Moore and Sam Holmes)