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UPDATE 1-Mexican foreign minister says 'life after NAFTA' possible

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NEW YORK, Sept 22 (Reuters) - Mexican Foreign Minister Luis Videgaray said on Friday that investors were growing optimistic about a favorable outcome to talks to revamp the North American Free Trade Agreement, even as he suggested that Mexico could bounce back if the negotiations collapse.

"People are starting to understand that there could be life after NAFTA if the U.S. withdraws," Videgaray said in a speech at the Council on Foreign Relations.

He spoke as negotiators from the United States, Mexico and Canada prepare to kick off the third round of talks on overhauling the trade deal under pressure from U.S. President Donald Trump, who has repeatedly attacked NAFTA as a jobs killer and threatened to tear it up.

Despite that tough talk, Videgaray said markets are relatively sanguine about the situation.

Many investments are happening and investors and markets are realizing that theres a high chance that theres going to be a good deal here," he said. "That was not priced in at the beginning of the year."

(Reporting by Dion Rabouin; Editing by Leslie Adler and Nick Zieminski)