UPDATE 1-Britain's FTSE flat but manages best month in seven
* FTSE down 0.01 percent
* Three-week rally put market near all-time highs
* Pearson issues profit warning
* Old Mutual the latest upbeat earnings report
LONDON, Feb 28 (Reuters) - Britain's top share index held steady on Friday but still posted its best month in seven, thanks to a three-week rally that raised it within touching distance of its all-time high.
Shares have recovered strongly after hitting a 2014 low in early February. While that rally has stalled this week as political turmoil in Ukraine and fresh concerns about China's economy have revived concerns about emerging markets, the FTSE 100 finished the month just 2 percent below its record peak, set in 1999.
The 4.6 percent gain posted this month made it the best February in 15 years.
"It's been a global rebound from deeply oversold levels," said Gerard Lane, equity strategist at Shore Capital, who cautioned the rally could soon run out of momentum. "I think the market will go up but I think it's getting to a valuation which is aggressive."
Also supporting the recent upturn has been a decent earnings season. Some 69 percent of companies that have reported quarterly earnings so far have beaten or met expectations.
On the day, the FTSE 100 closed down 0.57 points, or 0.01 percent, at 6,809.70.
Leading the market lower was British publisher Pearson , which fell 5.9 percent after warning it expected earnings to drop in 2014. The group reported results within the range of already lowered forecasts caused by a deteriorating U.S. education market. It was one of the day's most heavily traded stocks, with volumes more than four times its 90-day average.
"They're pretty awful figures. They're trying to rebuild around this U.S. education division, which has caused a real weakness here," ETX Capital head of trading Joe Rundle said.
"I wouldn't want to be long. They're betting on a losing horse. They don't have the scale to compete in this industry."
Shares in power provider Aggreko fell 4.3 percent on news that its chief executive of 11 years was leaving to join the British outsourcer Serco.
The bookmaker William Hill led the gainers, up 6.1 percent after it said it would cut costs by up to 20 million pounds ($33 million) in 2015.
South African paper maker Mondi was another strong performer on the day, its shares rising by 5.9 percent. The group posted higher 2013 full-year earnings, helped by benefits from acquisitions in its packaging business.