HONG KONG — Asian stocks declined on Tuesday in thin regional trading, with Hong Kong's Hang Seng falling 1.3% to 25,757.56. U.S. stocks had retreated from record highs the previous day as tensions between the United States and Iran weighed on global markets.

Markets in Japan, South Korea and mainland China were closed for holidays. Australia's S&P/ASX 200 lost 0.4% to 8,659.90, India's Sensex lost 0.7%, and Taiwan's Taiex gained 0.3%. U.S. futures edged 0.1% higher.

The Reserve Bank of Australia raised its benchmark interest rate to 4.35%, its third quarter percentage point increase this year. The central bank said conflict in the Middle East had sharply increased fuel and commodity prices that were already adding to inflation. Australia's inflation for the year through March was 4.6%, above the bank's target band of 2% to 3%.

The ceasefire between the U.S. and Iran was tested on Monday. The U.S. military said it had sunk six Iranian small boats targeting civilian ships, and two U.S.-flagged vessels successfully passed through the Strait of Hormuz, which remains largely closed to shipping. The United States imposed a sea blockade on Iranian ports and demanded that Iran reopen the strait. The United Arab Emirates said it came under attack from Iran, the first such attack since the ceasefire last month.

U.S. President Donald Trump's "Project Freedom" plan began on Monday, under which the United States would help guide stranded ships through the Strait of Hormuz. Talks on a permanent end to the war have stalled.

"We are seeing the first signs of the ceasefire between the U.S. and Iran breaking down in a re-escalation in the Persian Gulf," ING Bank analysts Warren Patterson and Ewa Manthey wrote. They added that "Any relief from stranded vessels making their way through the Strait will be temporary, with very few inbound vessels moving into the Persian Gulf."

Oil prices fell back after rising earlier on the escalating tensions. Brent crude fell $1.13 to $113.31 per barrel after surging above $114 on Monday, when it gained nearly 6%. Before the war began in late February, Brent was trading near $70 per barrel. Benchmark U.S. crude slipped $2.04 to $104.38 per barrel.

On Monday, the S&P 500 fell 0.4% to 7,200.75, the Dow Jones Industrial Average fell 1.1% to 48,941.90, and the Nasdaq composite dropped 0.2% to 25,067.80. The U.S. dollar rose to 157.27 Japanese yen from 157.25 yen, and the euro traded at $1.1680, down from $1.1689.