IHS Markit's Euro Zone Composite Flash Purchasing Managers' Index (PMI), seen as a good gauge of economic health, rose to 51.6 in February from January's final reading of 51.3, beating all forecasts in a Reuters poll which had a median prediction of 51.0.

Anything above 50 indicates growth.

"The euro zone economy managed to pick up some momentum again in February despite many companies having been disrupted in various ways by the coronavirus, which caused supply problems," said Chris Williamson, chief business economist at IHS Markit.

Demand remained relatively strong, suggesting there won't be a deterioration next month. The new business index held at January's seven-month high of 51.3.

Williamson said the survey was consistent with GDP growth of 0.2%, matching the projection in a Reuters poll published this week. [ECILT/EU]

The headline index was buoyed by a rise in the PMI for the bloc's dominant services industry to a forecast-beating 52.8 from 52.5.

With demand resilient, demonstrating some confidence, firms took on more workers, albeit at a slower rate than in January. The employment index dipped to 52.6 from 53.0.

While a manufacturing PMI held below the break-even mark, it continued its upwards march. It rose to 49.1 from 47.9, its highest level in a year and ahead of all forecasts in a Reuters poll.

An index measuring output, which feeds in to the composite PMI, rose to 48.4 from 48.0.

Most forward-looking indicators in the survey moved in the right direction, suggesting the manufacturing recovery was still on course and optimism remained elevated. The future output index only dipped to 57.9 from January's 17-month high of 59.8.

"The expansion is being led by welcome resilience in the service sector but manufacturing is also showing encouraging signs of pulling out of the downturn that has plagued producers for over a year," Williamson said.

(Reporting by Jonathan Cable; Editing by Hugh Lawson)