LONDON (Reuters) - Global property derivatives trading hit a 2009 high in the third quarter as more investors opted to adjust their exposure to the rebounding real estate market synthetically rather than buying or selling buildings.

Investment Property Databank, which provides licences for investors who trade swaps based on its global suite of indexes, said 762 million pounds worth of contracts in 78 trades were struck in the third quarter.

This compares with 708 million pounds worth of deals in the second quarter and 606 million pounds of deals in the first.

"This quarter's derivative volumes show a continuation of the gradual market recovery, both in absolute terms and relative to the level of direct property transactions," said Nick Scarles, chairman of the Investment Property Forum and group finance director at property firm Grosvenor.

"While the substantial reduction in the number of transactions has been balanced with an increase in average deal size, what stands out is a significantly increased market participation by end users," he said.

Deutsche Bank senior trader Charles Harris said the property derivatives market had passed a milestone where those looking at the market and using derivatives outnumbered those who were not looking and had no plans to use the market.

"End user activity has leapt up across the board," he said.

"There are different rationales for trading now: from asset managers looking to rebalance portfolios, to investors seeking protection against further falls, while some will simply be looking for a quick property market exposure," Harris said at the quarterly market briefing.

However, the UK still dominates global trading, underlining a lack of liquidity in smaller markets such as France and Germany. The UK accounted for 670 million pounds in 69 trades, IPD said.