* Economic growth expands 0.45 percent month-on-month
* Sharpest rise since November on strength in industry
* Annual growth notches 1.7 percent
MEXICO CITY, July 25 Mexico's economy expanded in May by the most in six months, helped by strength in the industrial sector, and partially making up for April's slump in Latin America's no. 2 economy.
Mexico's monthly gross domestic product proxy rose by 0.45 percent in May compared with the prior month, rebounding from an upwardly revised 0.71 percent contraction in April, the national statistics agency said on Thursday.
Industry posted a 1.39 percent month-on-month rise, its fastest pace since June, 2012, while the services sector grew by 0.34 percent from a 0.54 percent contraction in the previous month.
Mexico's annual economic growth slumped in the first quarter to its weakest in three years, prompting the government to cut growth estimates to 3.1 percent for the year, down from last year's 3.9 percent rate.
But data earlier this month showed Mexican industrial output rose at its fastest pace in nearly a year in May on stronger manufacturing and more robust construction activity.
Markets have priced out further interest rate cuts since the central bank's March cut to a record low, as expectations mount for the U.S. Federal Reserve to rein in stimulus, which may weaken the peso further and push up import prices.
On an annual basis, economic activity rose 1.7 percent in the 12 months through May, well below April's downwardly revised 4.54 percent annual expansion.
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