The benchmark KSE-100 Index at the Pakistan Stock Exchange gained 205.83 points, or 0.12%, to settle at 176,133.56.
The index climbed to an intraday high of 178,370.45 before surrendering most of its gains, while its lowest level of the session was 176,062.69, remaining above the previous close throughout the day.
Market participants said investor sentiment remained closely tied to developments in the ongoing US-Iran conflict.
"The market has become highly dependent on news flow stemming from the US-Iran conflict," said Ahfaz Mustafa, Chief Executive Officer of Ismail Iqbal Securities.
He said any developments that ease pressure on global oil prices are viewed positively by investors, adding that reports of possible negotiations and the visit of Iran s interior minister to Pakistan have raised hopes of progress towards de-escalation. He also noted that the ongoing corporate earnings season has helped sustain investor interest.
International oil prices edged lower on Tuesday as traders balanced reports of renewed mediation efforts between Washington and Tehran against continued military exchanges and threats by Yemen s Houthis to impose a naval blockade on Saudi Arabia.
Brent crude futures fell 0.9% to $88.44 per barrel, while US West Texas Intermediate (WTI) crude dropped 0.9% to $82.50 per barrel.
Reports suggested that international mediators had proposed a 10-day ceasefire aimed at reviving the June 17 interim memorandum of understanding between the United States and Iran. However, analysts cautioned that significant differences remain between the two sides, while US President Donald Trump has vowed retaliation following the deaths of several American troops.
The diplomatic efforts came after another night of US strikes on Iranian targets and retaliatory attacks by Iran s Revolutionary Guards against US military assets in the region.
Concerns over global energy supplies also persisted after a tanker in the Strait of Hormuz was reportedly struck by an unidentified projectile, forcing its crew to abandon the vessel, according to the United Kingdom Maritime Trade Operations (UKMTO).
Adding to market uncertainty, Yemen s Iran-backed Houthis announced plans to impose a naval blockade on Saudi Arabia, raising fears of further disruptions to global energy trade.
On the domestic front, investors also welcomed progress in Pakistan s economic engagement with Canada following Canadian Foreign Minister Anita Anand s visit to Islamabad.
The two countries agreed to expand cooperation in trade, investment, agriculture, mining, renewable energy, security and development. The visit also saw progress on negotiations for a Foreign Investment Promotion and Protection Agreement (FIPA), the revival of the Pakistan-Canada Joint Working Group on Trade and Investment, and the signing of a protocol governing imports of Canadian canola into Pakistan.
The KSE-100 Index had also ended Monday s session in positive territory, gaining 124.95 points, or 0.07%, to close at 175,927.74.
