Mainland stocks ended higher, rebounding from a two-month low on Tuesday, as tech shares led gains on signs of easing geopolitical tensions and as global markets shrugged off worries that the AI sector is overheating.

In Hong Kong, the benchmark Hang Seng Index ended trading on Tuesday up 178 points, or 0.69 percent, at 25,894.

Shares of Alibaba were up HK$3.30, or 2.13 percent, at HK$157.80 ahead of its earnings later in the day, which could affect sentiment among Chinese tech companies.

Shares of Xiaomi closed HK$1.68, or 4.4 percent, up at HK$40.34 after its founder and chairman, Lei Jun, bought shares in the open market.

Tech majors traded in Hong Kong rose 1.2 percent, following an overnight rally in their counterparts traded in New York. The index is down nearly 20 percent from a four-year peak hit in early October.

Investors have been taking profits on most days this month in sectors that have rallied strongly in 2025, including technology and innovative drugs.

The mainland gains saw the benchmark Shanghai Composite Index up 0.87 percent at 3,870 while the Shenzhen Component Index was 1.53 percent higher at 12,777 and the ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, advanced 1.77 percent to 2,980.

China's blue-chip CSI300 Index ended 1 percent higher.

The gains came after US leader Donald Trump touted relations with China as "extremely strong" on Monday following a call with President Xi Jinping.

AI-related shares led gains onshore, up 2 percent while the CSI 5G Communications Index gained nearly 4 percent.

"We believe the current tech rally is far from over and is likely to resume after a short-term pullback. The key reason is that a fundamental reversal in the U.S. AI industry appears unlikely, which should leave ample room for valuation expansion among comparable A-share companies," analysts at Zhongtai Securities said in a note.

In Japan, the Nikkei stock gauge erased most of its early gains to end nearly flat as SoftBank Group tanked almost 10 percent on concerns about competition between OpenAI's ChatGPT and Google's Gemini.

The Nikkei 225 Index was up 0.07 percent at 48,659, after rising as much as 1.14 percent. The broader Topix was down 0.21 percent at 3,290.

"Investors were concerned about the competitiveness of ChatGPT from OpenAI, in which SoftBank Group invests, with Google's new Gemini," said Kazuaki Shimada, chief strategist at IwaiCosmo Securities. (Reuters/Xinhua)