WRAPUP 1-Mexico economy grows, high peso not hurting trade

* Mexico economy grew 0.58 percent in August from July

* Growth 7.25 percent year on year vs 5.70 seen in poll

* Finance minister says peso gains not hurting exports

MEXICO CITY, Oct 27 (Reuters) - Mexico's economy expanded more than expected in August while the country's finance minister said a strengthening peso was not hurting exports.

The economy grew 0.58 percent in August MXIGAE=ECI from July and 7.25 percent from a year earlier MXIGDP=ECI, the national statistics agency said on Wednesday.

Analysts had forecast growth in the IGAE reading, a proxy for total economic output, of 5.70 percent from a year earlier.

Some 80 percent of Mexican exports head over the northern border so the health of the economy is closely tied to that of the United States.

However, while the U.S. outlook is uncertain, Mexico has benefited with the rest of Latin America from strong inflows of foreign investment seeking higher yields due to a weak dollar.

That has helped the peso MXN= MEX01 strengthen against the dollar but Finance Minister Ernesto Cordero said Mexico is not losing export competitiveness due to those gains.

"We have had a process of peso appreciation but Mexico has not lost its export competitiveness due to this," Finance Minister Ernesto Cordero told radio station Radio Formula.

Cordero said the economy should grow 5 percent this year.

The Mexican currency is 6 percent stronger from its Sept. 1 levels but fell 0.5 percent to 12.455 per U.S. dollar early on Wednesday as the dollar strengthened broadly. (Reporting by Patrick Rucker, Jason Lange, Caroline Stauffer and Veronica Gomez; Editing by James Dalgleish)