European stock markets rose Tuesday while Wall Street mostly pulled back as investors weighed the potential for peace in Ukraine and looked ahead to a major speech by the U.S. Federal Reserve chief for signals on interest rate policy.

Optimism for a diplomatic breakthrough in Russia’s war against Ukraine lifted sentiment across Europe. U.S. President Donald Trump said he had spoken by phone with Russian President Vladimir Putin following a White House meeting with Ukrainian President Volodymyr Zelensky and European leaders.

Zelensky expressed readiness for what would be his first face-to-face meeting with Putin since Russia launched its invasion nearly three and a half years ago.

Defense stocks slumped on the possibility of de-escalation, with Germany’s Rheinmetall falling 4.7% and France’s Thales down 4.1%.

Wall Street, however, retreated amid investor caution. The Nasdaq Composite fell 1.5%, the S&P 500 dropped 0.6%, and the Dow Jones Industrial Average ended flat.

In Europe, major indexes posted gains. London’s FTSE 100, Paris’ CAC 40, and Frankfurt’s DAX all closed higher. Asian markets had a mixed session, with Japan’s Nikkei briefly touching a record high before ending 0.4% lower. Shanghai finished flat, while Hong Kong, Sydney, and Seoul posted losses. Singapore, Bangkok, and Mumbai edged higher.

Investors also turned their focus to Federal Reserve Chair Jerome Powell’s upcoming remarks at the annual Jackson Hole symposium in Wyoming. The speech, set for Friday, is expected to offer insights into whether the central bank will move forward with a widely anticipated interest rate cut at its September policy meeting.

"Markets seem to be exercising some caution ahead of the Jackson Hole meeting later this week and as talks over a peace agreement between Russia and Ukraine remain inconclusive," said AJ Bell's head of financial analysis Danni Hewson.

Oil prices, which have seen sharp swings in recent days, declined after Monday’s gains. Analysts attributed the dip to the possibility of sanctions on Russian energy easing if a peace deal is reached.

"Oil prices have dropped a little as a deal edges closer, given that it's likely to lead to an easing of sanctions on Russia energy imports, increasing supplies on global markets," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

In corporate news, Intel shares surged roughly 7% in New York after Japanese investment firm SoftBank announced a $2 billion investment in the U.S. chipmaker. The deal could involve the U.S. government taking a stake in Intel in exchange for grants, according to White House Press Secretary Karoline Leavitt.