U.S. industrial output advanced by a stronger-than-expected 0.7 percent in February, as American firms operated at their fastest pace since August 2001, the Federal Reserve said in a report on Monday. February's production gain was the larger than Wall Street analysts' expectations for a 0.4 percent increase. Capacity utilization, which measures how much productive capacity is in use, rose to 76.6 percent from 76.1 percent in January. Factory production, which makes up more than four-fifths of overall industrial production, posted a 1.0 percent rise in February. Manufacturing capacity in use increased to 75.2 percent, its highest level since June 2001.|||www.reuters.com