World stock markets rose Tuesday as coronavirus lockdowns were relaxed and China-US tensions appeared to be easing, dealers said.

In Europe, Frankfurt was the star performer as German investors played catch-up after a long holiday weekend and eyed hopes for a new COVID-19 domestic stimulus package.

Lufthansa shares soared after the airline's supervisory board approved a nine-billion-euro ($10-billion) bailout from the German government.

Paris equities, also solidly higher, ignored the French government's dire prediction that the economy will shrink 11 percent this year.

"Stock markets in Europe are showing decent gains as there is continued optimism in relation to the reopening of economies," said analyst David Madden at trading firm CMC Markets UK.

"Governments have been taking steps to loosen their lockdown restrictions, so there is a growing feeling that things are slowly going back to normal," he added.

The euro forged another two-month peak.

Oil marched higher on hopes of recovering demand, and amid speculation that key producers including Saudi Arabia and Russia will extend massive output cuts that have helped support the virus-plagued market.

Traders were still tracking China-US tensions -- as well as anti-racism protests in several large American cities, and internationally.

"The absence of a serious trade rift between the US and China is helping sentiment," said Madden.

"Dealers on this side of the Atlantic have watched in horror at the scenes of rioting and looting in the US," he said.

On Wall Street, the Dow Jones index was higher in the late New York morning, but underperformed its European peers.

Investors were still wary because of the possibility of a second coronavirus wave, and "it's unlikely they will feel any safer with military Humvees rolling down Pennsylvania Avenue", said Stephen Innes, chief market strategist at AxiCorp.

"The economic recovery has been dependent on reducing fear. If fear is generated by anarchy in the streets, that will harm the recovery," he said.

The lifting of strict measures around the world has seen the reopening of bars, cafes and tourist attractions such as the Colosseum, fuelling hopes for the economic recovery
The lifting of strict measures around the world has seen the reopening of bars, cafes and tourist attractions such as the Colosseum, fuelling hopes for the economic recovery AFP / Filippo MONTEFORTE

London - FTSE 100: UP 0.9 percent at 6,220.14 points (close)

Frankfurt - DAX 30: UP 3.8 percent at 12,021.28 (close)

Paris - CAC 40: UP 2.0 percent at 4,858.97 (close)

EURO STOXX 50: UP 2.6 percent at 3,158.57

New York - Dow: UP 0.5 percent at 25,603.27

Tokyo - Nikkei 225: UP 1.2 percent at 22,325.61 (close)

Hong Kong - Hang Seng: UP 1.1 percent at 23,995.94 (close)

Shanghai - Composite: UP 0.2 percent at 2,921.40 (close)

Brent North Sea crude: UP 2.2 percent at $39.18 per barrel

West Texas Intermediate: UP 1.8 percent at $36.05

Euro/dollar: UP at $1.1184 from $1.1136 at 2100 GMT

Dollar/yen: UP at 108.57 yen from 107.59 yen

Pound/dollar: UP at $1.2546 from $1.2492