I'm writing a story based on the Sigurd Fafnirsbane/Nibelung hoard tradition, where dwarves play a huge role. There's also some influence from The Hobbit (I'm a Tolkien nerd, so that's unavoidable). While researching various Scandinavian/Germanic traditions (especially Norse myths) about dwarves and rereading Tolkien, I came across a quote from the appendix of LOTR about "a Mannish superstition that Dwarves grow out of stone."

Now, through reading the Poetic Edda, I found the story about the dwarf Alviss trying to marry Thor's daughter. Thor challenges Alviss to a riddle/general knowledge contest which lasts until the morning, when Alviss is turned to stone. Dwarves in Norse myth apparently hate sunlight and can easily turn to stone, so "growing out of stone" makes a lot sense - they "go back to what they are made of."
Are there any references to dwarves "growing out of stone" in Northern European folklore?