European stock markets edged up on Thursday, the first day of the fourth quarter, as London investors paused after the biggest ever quarterly gain on economic recovery hopes, dealers said.

The FTSE 100 index added 0.31 percent to 5,149.73 points in early morning trade.

Frankfurt's DAX 30 won 0.59 percent to 5,708.94 points and in Paris the CAC 40 advanced 0.38 percent to 3,809.83 points.

The DJ Euro Stoxx 50 index of top eurozone shares climbed 0.44 percent to 2,885.30.

On the foreign exchange market, the European single currency fell to 1.4583 dollars.

London's FTSE had surged by a record-breaking 21 percent during the third quarter, which ended on Wednesday, as investors were heartened by mounting evidence that the global economy was on the mend.

German shares jumped 15 percent and French stocks soared by 17 percent in value in the three months to the end of September.

"The FTSE 100 has enjoyed its best ever quarter, adding 21 percent over the last three months, leaving many to ask the question whether the rally can now continue," said analyst Ben Potter at betting firm IG Index.

"Certainly any pick up in mergers and acquisitions activity will lend support across the board, whilst higher resource prices will support the heavyweight mining and petrochemicals sectors."

However, European equities had fallen for the second day running on Wednesday, after publication of worse-than-expected jobs data in the United States, which is the world's biggest economy.

Despite ending in negative territory, the London FTSE has now gained about 15 percent since the start of 2009.

ODL Securities analyst John Murphy also questioned whether the rally was sustainable.

"A stellar run has left the markets looking healthy, but investors are still asking themselves if it is a bubble, and if so, when will it burst?" Murphy commented.

"Whilst it is important to appreciate the past, one needs to keep looking forward, and as we enter October, will talk of crashes become a self-fulfilling prophecy?"

Wall Street shares fell for the second consecutive day on Wednesday after data showing a steep drop in private sector payrolls fuelled increased jitters on the economic outlook.

The Dow Jones Industrial Average shed 0.31 percent to close at 9,712.28 in a roller-coaster session.

Despite ending the day on a deficit, the Dow closed the third quarter with an impressive 15 percent gain -- its best quarter since 1998.

Meanwhile in Asia on Thursday, Japanese shares sank 1.53 percent, hitting a two-month low in the wake of losses on Wall Street and signs that Japanese firms plan to curb their investment, dealers said.

Tokyo's benchmark Nikkei-225 index ended at 9,978.64, the weakest close since July 24.

The Nikkei had closed the third quarter on Wednesday with a slender gain of 1.7 percent.

Hargreaves Lansdown analyst Richard Hunter said the upcoming third-quarter company results season would prove crucial for stocks.

"Over the next few weeks, third-quarter earnings will gradually take centre stage. These results will have a major bearing on where markets go next," he said.