* Cordero says no evidence of impact in foreign investment
* Pace of job creation not hurt by violence, he says
By Tomas Sarmiento
MEXICO CITY, Oct 3 (Reuters) - Mexican Finance Minister Ernesto Cordero said on Sunday there is no evidence that Mexico's escalating drug war is discouraging foreign investment or interfering with the country's economic recovery.
Investors, tourists and the U.S. government have been worried by an expanding wave of cartel executions and gun battles in Mexican towns and cities, as well as increasing attacks on public officials.
"Up until now, there is no evidence that this is stopping the level of investment that is arriving to Mexico," Cordero told a press conference, referring to flows of funds into financial markets as well as investment in assets like factories.
Drug violence has killed more than 29,000 people since late 2006 when President Felipe Calderon took office and deployed the army to challenge drug cartels in areas that the gangs have long controlled.
But the death toll is still rising as Mexico struggles to get its economy back up to speed after the global economic crisis knocked it into the worst recession since the 1930s.
The northern business city of Monterrey saw four grenade attacks this weekend, but only injuries were reported. Police also investigated the reported kidnapping of 20 Mexican tourists in the Pacific resort of Acapulco. For details see [nN03272843] and [nN02179860]
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Full coverage of drugs war:
http://www.reuters.com/subjects/mexico-drug-war
Factbox on political risks in Mexico: [ID:nRISKMX]
Factbox on latest attacks: [ID:nN26195163]
For graphic, go to http://link.reuters.com/qyn96n
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Some companies have frozen new investments in border cities like Ciudad Juarez, which is home to many factories but has been wracked by violence.
But major corporations like Volkswagen <VOWG.DE> are opening new plants in central Mexico, showing that the relatively low labor costs and proximity to the United States still outweigh concerns about violence for many companies.
Officials said on Sunday the economy added 721,483 new tax-paying private-sector jobs so far this year. Cordero said the pace of job creation proved violence was not dragging the economy down.
"We are generating jobs at a rhythm that we have not reached in the last 10 years, probably in the last 20 years. So that way, there is no evidence that this is stopping the economic recovery," Cordero said.
Last month, Cordero said countries with crime problems could see 1.2 percentage points sliced off their growth in gross domestic product, but he did not specifically mention Mexico.
Mexico's economy is seen growing by 4.5 percent this year and around 3.8 percent in 2011.
Credit Suisse economist Alonso Cervera wrote in a report last week that the drug war is probably hurting the country's recovery from recession.
Analysts admit it is difficult to calculate the economic impact of the violence and they say companies are paying higher costs for private security services.
The Credit Suisse report said it was possible that drug violence had hit investment in factories while noting that Mexicans might be investing more of their money in foreign assets. (Reporting by Tomas Sarmiento and Michael O'Boyle; editing by Christopher Wilson)
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