LONDON: Stock markets rose Wednesday as traders weighed economic recovery prospects against concerns over the fast-spreading Delta virus variant and China's regulatory crackdown.

European and Asian stock markets mostly advanced following Tuesday's latest record close for the S&P 500 on Wall Street.

While markets have cheered strong company earnings in recent weeks, there are growing fears over the Delta variant which has forced countries to reimpose strict containment measures.

"It doesn't take much to rattle the markets, and there are plenty of reasons to remain cautious, such as many stocks trading on elevated valuations and the Delta variant continuing to cause disruption," noted Russ Mould, investment director at AJ Bell.

The main worry surrounds the world's second biggest economy China, where millions of people have been put into lockdown.

The country had brought domestic cases of the coronavirus down to virtually zero after the disease first emerged in Wuhan in late 2019, but it is now facing its worst outbreak in months.

"While China's resolve to control outbreaks has been well illustrated, markets will continue to watch the outbreak given the high transmissibility of the Delta variant," said National Australia Bank's Tapas Strickland.

"There are also concerns China's domestic vaccines are less effective against the Delta variant."

Oil prices steadied Wednesday following recent volatility and amid predictions that oil demand in China could tumble as a result of the tough new lockdown measures.

Investors meanwhile continue to fret over China's crackdown on a range of sectors including tech, private tuition, and property.

There is a fear that gaming firms could be next after a state-run media article described online games as "spiritual opium".

Tencent, which has been hammered by the latest government moves, rose more than two percent Wednesday on bargain-buying though it is still down more than 20 percent since the start of last month.

Alibaba, another firm caught in the regulatory sweep, slipped slightly after announcing revenues fell short of forecasts for the first time in two years.