UPDATE 3-Brazil economic growth speeds up in the 2nd quarter

(Adds finance minister comments, paragraphs 13-15)

By Elzio Barreto

SAO PAULO, Sept 10 (Reuters) - Brazil's economic growth picked up speed in the second quarter, led by a boom in corporate investments and surging domestic demand that contrasts sharply with slowdowns in the United States, Japan and Europe.

The faster-than-expected expansion, at more than a 6 percent annual growth rate, may help Latin America's largest economy weather a global credit market turmoil, economists said. Still, the fast pace underscores central bank concerns of red-hot domestic demand that could keep inflation elevated.

"The economic cycle in emerging markets in general is in a very benign phase and Brazil is part of that," said Zeina Latif, chief Brazil economist at ING in Sao Paulo.

"The country is reaping the benefits of a strong economy that tends to create greater resistance (to external shocks), even if you compare to other emerging markets."

Gross domestic product grew 1.6 percent in the second quarter from the first quarter BRGDP=ECI, compared with a revised 0.8 percent expansion in the first three months of the year, statistics agency IBGE said on Wednesday.

The economy expanded a hefty 6.1 percent when compared with the second quarter of 2007 BRGDPY=ECI, after posting revised year-on-year growth of 5.9 percent in the first quarter.

A Reuters poll forecast growth of 1.1 percent from the first quarter and 5.5 percent from the second quarter of 2007.

The agriculture sector, often referred to as the green anchor of the Brazilian economy, grew 3.8 percent from the first quarter, leading the GDP expansion. It rebounded from a 1.3 percent drop in the first three months of the year.

Services growth quickened to 1.3 percent from 1.2 percent in the previous quarter and jumped 5.5 percent year on year.

Industry grew 0.9 percent quarter-on-quarter, slowing from a 1.7 percent expansion in the first quarter. It grew 5.7 percent from the second quarter of 2007.

Capital investments in areas such as machinery, factories and infrastructure increased 5.4 percent quarter-on-quarter after expanding 1.6 percent in the first quarter.

Investments jumped 16.2 percent from the second quarter of 2007 as companies spent heavily to expand capacity and keep up with red-hot domestic demand.

The figures released on Wednesday with strong capital investments are proof that Brazil is poised for sustained growth in the years to come, Finance Minister Guido Mantega said.

"This growth is quality growth because one of the items that rose the most was investments," Mantega said. "We should end the year with a very good performance, between 5 percent and 5.5 percent."