Australian shares have steadied on Thursday after the biggest single-session gain since the Middle East war began, as traders weighed conflicting statements from the US and Iran about negotiations to end the conflict.

The S&P/ASX 200 rose 7.50 points, or 0.1 per cent, to 8541.80 at 12.02pm AEDT, holding on to Wednesday’s 1.9 per cent surge that recovered $55 billion in market value wiped out since the war began on February 28.

The moves reflected a cautious optimism across global markets as US efforts to end the war gathered pace. Iran rejected Washington’s 15-point plan and has instead set out its own demands including reparations for damages and recognition of its authority over the Strait of Hormuz.

“Markets are still decisively headline driven, all eyes and ears are squarely focused on weighing up whether recent news marks a genuine de-escalation attempt, or a pre-cursor to a new kinetic equilibrium,” Westpac economist Ryan Wells said.

Brent crude rose 1.3 per cent to $US103.50 a barrel on Thursday, with only Iran-friendly nations allowed to pass the Strait of Hormuz safely. On the ASX, energy remained strong, with Santos up 1.5 per cent and Karoon Energy 1.4 per cent.

Woodside Energy firmed 1 per cent as it also took operational control of its Beaumont New Ammonia facility in Texas from OCI Global, which can produce 1.1 million tonnes of ammonia per year and may double US exports.

Defence stocks saw strong gains led by DroneShield, which rallied 9.4 per cent, Electro Optic Systems 6.1 per cent, and shipbuilder Austal by 4.3 per cent

The major banks were mixed, led by a 1.3 per cent bounce in Commonwealth Bank, while Westpac rose 0.7 per cent. ANZ and National Australia Bank both fell 0.1 per cent.

Gold miners weighed on the index after the precious metal steadied at about $US4540 an ounce after a modest two-day gain. Newmont fell 2 per cent, Genesis Minerals dropped 5 per cent and Evolution Mining by 1.4 per cent.

Stocks in focus

In company news, Washington H. Soul Pattison rose 0.2 per cent as it delivered a 9.7 per cent return for the half, outperforming the ASX 200 Total Return Index by 6.6 per cent. The group lifted its interim dividend by 9.1 per cent to 48¢.

ASX Limited fell 1.4 per cent after appointing Vic Jokovic as a non-executive director, effective May 4, ahead of his election at the annual meeting in October.

AMP was flat per cent after naming Adrian Ryan as acting chief financial officer from March 30, as Blair Vernon transitions to chief executive.

Airtasker added 2.2 per cent after striking a $5 million media partnership with Nine Entertainment, the owner of this masthead, to boost brand presence in Australia, funded via a two-year convertible note.