Japanese stocks gained after chip stocks gained, renewing investor optimism on artificial intelligence investments ahead of key Nvidia results due on Wednesday.

The benchmark Nikkei 225 rose 328.34 points, or 0.50%, to close at 65,856.43.

Oil prices fell as U.S.-Iran tensions escalated, with Washington imposing new sanctions and Tehran pledging retaliation.

On the corporate side, Tokio Marine Holdings (TYO:8766) is zeroing in on a sizable acquisition following a period of due diligence, with Australia-based Suncorp Group (ASX:SUN) arising as the most likely target, the Financial Times reported on Tuesday, citing two people with direct knowledge of the matter. Tokyo Marine shares closed 2% higher.

Mitsui Fudosan Retail Fund Investment (TYO:8964) said it extended the commitment period of its 5 billion yen credit line with Sumitomo Mitsui Trust Bank by one year to Sept. 29, 2029.

Also, ACSL (TYO:6232) said its board approved an international offering of 4.8 million new common shares, including 3.8 million shares to be underwritten and purchased by the underwriter, according to a Tokyo Stock Exchange filing on Tuesday.