Despite continued strong demand for smartphones, overall sales of mobile handsets worldwide dropped nearly 3 percent year on year in the third quarter of 2012, research firm Gartner said Wednesday.

Global sales of mobile phones reached about 427.7 million units in the quarter, compared to 441.5 million units in the same period a year earlier, according to a new report from Gartner.

The mobile phone market continued to be fueled by smartphones which have more advanced functions, as smartphone sales worldwide surged 46.9 percent from the same period last year.

Data from Garter showed that smartphone sales accounted for 39. 6 percent of total mobile phone sales in the third quarter, as Samsung and Apple dominated the smartphone market with a combined share of 46.5 percent, leaving a handful of vendors fighting over a distant third spot.

While the overall mobile phone market saw year-on-year decline, Gartner analysts said there were positive signs for the industry during the third quarter.

"After two consecutive quarters of decline in mobile phone sales, demand has improved in both mature and emerging markets as sales increased sequentially," Anshul Gupta, principal research analyst at Gartner, said in a statement.

"In China, sales of mobile phones grew driven by sales of smartphones, while demand of feature phones remained weak. In mature markets, we finally saw replacement sales pick up with the launch of new devices in the quarter," he added.