The official statistics agency, INSEE, said its business confidence index rose to 92 from August's 90, reaching its highest level since February, before France went into a two- month lockdown to contain the outbreak, plunging the economy deep into recession.

The closely watched index for the industrial sector improved particularly sharply, jumping to 96 from 92, exceeding the average expectations in a Reuters poll for a reading of 95. The index for the bigger services sector rose to 95 from 93.

The improvement comes even though the government has had no choice but to increase restrictions on gatherings in the face of a surge in new COVID-19 cases to record levels.

It also contrasts with another survey from IHS Markit, which showed that private sector activity slowed in September to a four-month low on weaker-than-expected services activity.

(Reporting by Leigh Thomas, editing by Larry King)