MEXICO CITY, May 3 (Reuters) - A Mexican manufacturing sector index from April rose to its highest in almost 3-1/2 years, pointing to further expansion as foreign demand supports exporters, an industry group said on Monday 3 May.

The IMEF factory index rose to 54.6 in April from a revised downward 53.7 in March, the Mexican Institute of Financial Executives, or IMEF, said in a report. The last time the index had such a high reading was in November 2006, at 55.4 points.

Readings of 50 and above signal likely expansion in subsequent months. The index first rose above that level last July.

Last week the central bank revised upward its outlook for growth this year, expecting Mexico's economy to expand between 4 percent and 5 percent in 2010 as Latin America's second largest economy recovers from a deep recession.

"The growing dynamism of imports, the propensity of consumption and retail sales in the United States, suggests that the demand in the country ... will continue to fuel the rebound in Mexican manufacturing," the IMEF said in a statement.

The United States buys around 80 percent of Mexican exports.

The IMEF's survey is similar to the Institute for Supply Management's survey of factory activity in the United States.

The IMEF's non-manufacturing index fell to 54.1 from 55.1 in the prior month, pointing to a weaker recovery in Mexico's domestic economy as consumer confidence remains low, the group said. (Reporting by Michael O'Boyle; Editing by Diane Craft)