* Output up 0.7 pct, mo/mo vs 0.5 pct in poll
* Factory output up nearly 1.1 percent
* Industrial output rises 3.6 pct yr/yr vs 3.9 pct expected
(Wraps in May auto data, adds graphic)
MEXICO CITY, June 11 Mexican industrial output
rose in April from March, helped by solid factory production
that backed expectations for policymakers to leave interest
rates steady through next year.
Production jumped nearly 0.7 percent from March,
just beating estimates in a Reuters poll, from an upwardly
revised 1.56 percent pace in March, the national statistics
agency said on Monday.
Solid demand in the United States for Mexican exports has
helped shield Mexico from a wider global slowdown that has
dragged on Brazil and pushed Latin America's top economy to
slash borrowing costs to prop up growth.
"There is still some demand for our manufacturing in the
United States to pull along our economy a bit more," said
Eduardo Gonzalez, an economist at Banamex in Mexico City.
Fueled by solid automobile production, factory output, a
subcomponent of industrial output, rose 1.1 percent in April,
month on month, after a 1 percent expansion in March.
"It's a very encouraging start to the second quarter," said
Luis Arcentales, an economist at Morgan Stanley in New York.
A separate report from the Mexican Auto Industry Association
(AMIA) on Monday showed that auto production rose 2.8 percent in
May from the same month a year earlier. Auto exports last month
rose by 5.7 percent on the year, AMIA said.
Mexico's economy grew faster than expected in the first
quarter and North American growth is holding up even as Europe
slides toward recession and growth cools in Asia.
Mexico's central bank held borrowing costs steady on Friday
as policymakers said there was a rising threat to global growth
from Europe's debt troubles.
But the central bank also ramped up concern that a weak peso
could fan inflation, and policymakers leaned back from an
interest rate cut.
Central banks usually lower interest rates to spur economic
growth and raise them to curb inflation.
Inflation sped up to 3.85 percent in the 12-month period
through May, but Gonzalez said there was still enough slack in
the economy from the deep 2009 recession to keep inflation
pressures from growth at bay.
"The central bank has plenty of margin to hold rates," he
said. "The United States will not change monetary policy until
late 2014, and Mexico will likely move in synch."
Interest rate futures were little changed after the data,
with the market betting Mexico will hold its benchmark rate
steady into mid-2014.
Industrial production in Mexico encompasses output in
mining, construction, utilities and manufacturing.
As compared with a year earlier, overall industrial
production rose 3.6 percent in April, lower than estimates of a
3.9 percent increase and off March's downwardly revised 3.1
(Reporting by Michael O'Boyle and Krista Hughes; Editing by