Updates with early European trading

By Ankur Banerjee and Johann M Cherian

July 21 (Reuters) - Global stocks rose on Tuesday as oil prices retreated from a one-month high on mediation efforts in the Middle East, and investors braced for corporate earnings that will test an AI trade that is under pressure.

Yemen's Iran-aligned Houthis said they would impose a naval blockade on Saudi Arabia, a move that could further disrupt energy supplies, amid increased attacks between the U.S. and Iran, even as efforts were being made to revive a fragile ceasefire.

A senior Iranian official told Reuters on Monday that Tehran had received a proposal from mediators for a 10-day ceasefire, intended to pave the way for a lasting agreement to end the war that began on February 28 with U.S.-Israeli attacks on Iran.

Brent crude futures LCOc1 eased 0.6% to $88.72 per barrel on Tuesday as investors latched on to hopes of a resolution. Brent hit a one-month high of $91.42 a barrel in the previous session. O/R

"It seems to suggest that this isn't a total breakdown. There are still channels for sort of talks to go on, which is great news. Just quite how successful they will be is another matter," said David Morrison, a senior market analyst at Trade Nation.

In equities, Europe's STOXX 600 .STOXX rose 0.2%, while futures tracking the tech-heavy Nasdaq NQc1 led gains on Wall Street EScv1 with a 1.4% rise, suggesting a bounce at the opening bell later.

In Asia overnight, Japan's Nikkei .N225 finished up 3% and South Korea's volatile KOSPI .KS11 ended 4.5% higher.

Trade was also in the spotlight after President Donald Trump slapped 50% tariffs on Canadian imports worth about $20 billion, in response to what the administration called discriminatory treatment of American-made items. USMCA trade negotiations are in progress, from which the United States has pointedly excluded Canada.

However, reaction in the Canadian dollar CAD=EBS and benchmark bonds CA10YT=RR was muted, while futures tracking the Toronto stock index SXFc1 inched up 0.3% after the bourse closed at a 12-day low on Monday.

"I suppose there's a feeling that it's going to be watered down, and ultimately, it's certainly not going to happen to the tune of 50%," Morrison said of Trump's tariff threat.

AI'S EARNINGS TEST

Investor focus this week will be on earnings from companies including Alphabet GOOGL.O and Intel INTC.O to gauge the impact of the war and whether the AI trade has more room to run, given sky-high profit expectations for the second quarter.

July has been a rough month for global tech stocks, as investors fret about high valuations and whether the investment in AI infrastructure will yield tangible results. Strong earnings from Asian chip bellwethers Samsung Electronics 005930.KS and TSMC 2330.TW in recent weeks were also not enough to satisfy investors.

"While demand for AI hardware remains red-hot, with companies barely able to keep up supply, investor expectations for earnings have become increasingly lofty, rendering the sector vulnerable even to a marginal adjustment in projections," said Fred Neumann, chief Asia economist at HSBC in Hong Kong.

"The economic backdrop is becoming more challenging as well," Neumann said.

Escalating U.S.-Iran tensions have revived worries about inflation and pushed Treasury yields higher. The 2-year note US2YT=RR yield, which typically moves in step with Federal Reserve interest-rate expectations, was at 4.2%, down 2 basis points on the day, following Monday's selloff, which pushed yields up 4 bps.

Traders are pricing in at least one rate hike from the Fed this year, and a roughly 20% possibility of a second, according to money markets.

The dollar was a touch weaker on the day, but still hovered near a one-week high against most major currencies. The euro EUR= last bought $1.142, while the Japanese yen JPY= was at 162.67 per dollar, still within sight of 40-year lows, which is keeping traders on alert for intervention from Tokyo.

Sterling GBP= was nursing losses after Prime Minister Andy Burnham appointed John Healey as the UK's new finance minister. It was last at $1.343, lower on the day and heading for a fourth consecutive daily decline.

Burnham said he would stick to the previous government's fiscal rules, though he would use any flexibility within them.