World stocks kicked off October on a steady note on Thursday as caution over the state of U.S. recovery tempered anticipation that the global economy would gather momentum in the final three months of 2009.

European stocks <.FTEU3> rose 0.5 percent after posting the best quarterly performance in nearly 10 years in the three months to September.

An upward revision to the euro zone's manufacturing activity index underpinned sentiment.

Investors however were reluctant to buy or sell aggressively ahead of a closely-watched U.S. jobs report on Friday. Data on Wednesday showed a surprising contraction in an index of U.S. Midwest business activity.

I don't think anyone will sell too aggressively ahead of the (U.S.) September employment report tomorrow, said Bernard McAlinden, investment strategist at NCB Stockbrokers.

The economic data hasn't been bad. House prices have been firm ... I think we're in the early stages of a new cycle and indices can go higher over the next year or so though the pace at which this rally can continue is questionable.

MSCI world equity index fell 0.1 percent, having risen more than 17 percent in the third quarter.

Emerging stocks <.MSCIEF> rose 0.3 percent.

The performance of risky assets in Q3 has been extraordinary ... We expect further gains in risky assets, but such rates of return look unlikely to be maintained, Barclays Wealth said in a note to clients.

U.S. crude oil fell 0.9 percent to $69.98 a barrel, weighed by concerns over rising stocks and weak demand.

The dollar <.DXY> rose 0.3 percent against a basket of major currencies.

The euro fell 0.4 percent to $1.4583 after the EU Economic and Monetary Affairs Commissioner Joaquin Almunia said the Eurogroup would discuss its strength. The September Bund future fell 21 ticks.

(Reporting by Natsuko Waki, editing by Mike Peacock)