UPDATE 2-European stocks hit all-time highs but economic worries remain

* Defensives real estate and utilities rise

* German DAX briefly hits record high

* Atos slumps after earnings forecast cut
(Updates to close)

By Sruthi Shankar and Susan Mathew

July 12 (Reuters) - European stocks scaled new highs on
Monday on broad-based gains, but worries about the pace of
economic recovery made defensive sectors the best bid while
travel stocks slumped with the Delta variant of coronavirus
becoming dominant.

The pan-European STOXX 600 index rose 0.7% and hit
461.10, extending gains from Friday after a tumultuous week.
Germany's DAX also briefly touched a new high of
15,806.900 before closing just below that level.

Real estate, utilities and healthcare
were among the best-gaining sectors, up between 1.4% and
1.6%. Travel and leisure dropped 1.3% with British
airlines leading losses .

The World Health Organisation said on Monday the infectious
Delta variant was becoming dominant, and many countries had yet
to receive enough vaccine doses to protect their health workers.

But England was still set to lift COVID-19 curbs next
week.

London stocks lagged European peers as
declines in travel stocks were accompanied by a slide in energy
and material stocks as oil and copper prices fell on economic
worries.

"Airlines are likely to continue on a relatively bumpy path
as the UK shows its willingness to allow COVID levels to surge
as a result of the reopening efforts," said Joshua Mahony,
senior market analyst at online trader IG.

Volatility picked up across global markets last week after
U.S. and China data raised fears that economic growth might have
peaked, driving government bond prices higher and stocks lower.

"The sharp decline in bond yields over the past week has not
yet been reflected in stock markets or commodities," analysts at
BCA Research wrote. "A correction over the next few months
cannot be ruled out."

Focus this week will also be on a bunch of economic reports
including headline U.S. inflation data and retail sales, as well
as U.S Federal Reserve Chair Jerome Powell's testimony before
Congress on Wednesday and Thursday on inflation and the timing
for tapering.

Among individual stocks, Daily Mail and General Trust Plc
jumped 3.3% after it said its largest shareholder, the
Rothermere family, might take the British newspaper private in a
810-million-pound ($1.13 billion) deal, if the sales of its
insurance risk unit and Cazoo business go through.

France's outdoor advertising company JCDecaux
jumped 10.1% after JPMorgan upgraded the stock to "overweight",
citing a sharp rebound in its air passenger numbers.

French IT consulting group Atos slumped 17.9% to
the bottom of STOXX 600 after it cut full-year earnings
forecast.

(Reporting by Sruthi Shankar in Bengaluru; editing by
Uttaresh.V and Richard Chang)