EU stocks sag but Frankfurt boosted by growth upgrade

European equities mostly sagged Tuesday after this week's recovery-driven global rally, but Frankfurt was boosted by news of a modest upgrade to German economic growth.

London stocks dipped 0.2 percent in midday deals, and Paris declined 0.3 percent in early afternoon eurozone trade.

Frankfurt however rallied 0.4 percent after Germany upgraded growth to 1.6 percent for the second quarter, or three months to June, thanks to strong consumer spending.

That was up 0.1 percentage points from the prior estimate.

"European stocks maybe also got a slight boost as data showed the German economy grew faster than expected in the second quarter," noted Markets.com analyst Neil Wilson.

"Nevertheless, the Bundesbank cautioned on Monday that the Delta (coronavirus) variant could see the country miss fullyear growth estimates."

Elsewhere, Asian stocks and oil prices also rebounded further on renewed optimism over the recovery outlook, dealers said.

Asia also rose after Washington gave full approval to PfizerBioNTech's vaccine, as an increase in US Covid infections appeared to be peaking.

A call by China's central bank for more economic support and a move to keep borrowing costs down also provided some cheer to the region, while hopes that Beijing's clampdown on the private sector was adding to the buoyant sentiment.

Markets have enjoyed a strong start to the week, further helped by bargain-hunting following a recent selloff caused by worries including the fast-spreading Delta variant and expectations the Fed will soon begin tapering financial support.

New York's three main indexes shot higher Monday-with the Nasdaq hitting a new record-as traders cheered news that the Food and Drug Administration had fully approved the PfizerBioNTech shot, which is expected to help push up vaccinations.

The positive news lifted global recovery hopes, which had taken a knock this month as some governments reimposed lockdowns or other containment measures.

Oil markets extended the previous day's surge of more than five percent, which had marked the best daily performance in nine months as recovery hopes lifted demand expectations.

The commodity had been suffering hefty losses in August on worries about Delta, but observers forecast prices will get back on track.

"The crude demand outlook will get a boost... now that the Delta variant appears to be peaking in the South and as China lowers local Covid cases to zero," said OANDA analyst Edward Moya.

Investors are now fixated on Powell's speech to central bankers and finance chiefs this week in Jackson Hole, Wyoming, hoping for some guidance on monetary policy as speculation swirls that the Fed is planning to taper its bond-buying programme by year's end.