UPDATE 2-Foreign investment in Mexico rises, misses target

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MEXICO CITY, Feb 21 (Reuters) - Foreign direct investment in Mexico grew to $18.938 billion last year, its second-highest level but short of an earlier government estimate, Economy Minister Eduardo Sojo said on Wednesday.

Foreign investment in 2006 was up 6.36 percent from the previous year, Sojo said.

"It came during an election year, which shows investor confidence in our institutions," he told reporters. Mexicans elected Felipe Calderon as president last year in a vote that was followed by big street protests from leftists claiming fraud.

The manufacturing, services, transport and communications sectors led the way and the biggest investor was the United States, followed by the Netherlands and France, Sojo said.

The government had earlier predicted foreign direct investment of $20 billion for 2006.

Mexico's best year for foreign investment was 2001, when Citibank's $12.5 billion purchase of Mexican bank Banamex pushed the annual figure up to $24.730 billion.

Mexico's economy grew a healthy 4.8 percent last year, but the government expects it to expand only 3.6 percent this year due to a slowdown in the United States.