(Reuters) - The number of new jobs in London's financial district dropped in October, lagging a recovery in the wider jobs market, according to research by an international recruitment firm.

A total of 2,335 new roles were created last month in the district, down from 2,380 in September, London-based financial services recruiter Astbury Marsden said in a release on Monday.

"Banks have been badly burnt in the past hiring on a short term bounce in business volumes and then having to go through costly lay-offs, so many are being prudent and putting off bigger hiring decisions," Chief Operating Officer Mark Cameron said.

The number of new jobs fell 12 percent in October from a year earlier.

However, there has been an increase in new contract roles, particularly within asset managers, the study said.

"Optimism is high and an increase on contract hires is an early indicator of recovery in the City jobs market - but there is a fly in the ointment," Cameron added.

"The financial performance of the big investment banks is still not robust enough for them to initiate the levels of hiring that you normally associate with new stock market highs."

The number of jobs had jumped by almost one-fifth in April as employers took heart from strong results at banks and as some confidence returned after the Cypriot banking crisis.

(Reporting by Abhirup Roy in Bangalore; editing by Matthew Lewis)