LONDON (Reuters) - A strong rebound in Britain's industrial output and house price data yesterday boosted hopes that the economic recovery remained on track during the first three months of 2010.

The pick-up in factory production in February and house prices in March suggests that unusually harsh winter weather, rather than more lasting factors, was primarily to blame for a drop in both sectors earlier in the year.

Equally, the bounce back probably represents a one-off catching-up from the weather-related slowdown rather than the start of a marked acceleration in growth

Sterling rallied to a seven-week high versus the euro after the data, which is also likely to reassure Prime Minister Gordon Brown as his Labour Party tries to win back supporters from the opposition Conservatives.

The Office for National Statistics said manufacturing output grew 1.3 percent in February after January's 1.0 percent drop, helped by a strong increase in production of food and drink, electrical and optical equipment as well as bricks and cement.

Year-on-year factory output was 1.3 percent higher in February than a year ago, its best showing since February 2008.

"The risks of a double dip seem to be receding quite sharply. It looks at the moment like we will broadly maintain the pace of economic expansion we saw in Q4," said RBS economist Ross Walker.

Academics at Britain's National Institute for Economic and Social Research estimated, based on yesterday's data, that the economy grew by 0.4 percent in the first quarter of 2010, the same as the official reading for the fourth quarter of 2009.

Britain only emerged from its deepest recession since World War Two during the last three months of 2009, when the economy grew by 0.4 percent, and analysts say the recovery remains fragile.