* Floods, mudslides from rains kill 42 in El Salvador

* Ida could strengthen into a Category 2 hurricane

* Forecast to enter oil-producing Gulf of Mexico on Sunday (Recasts with details from El Salvador, previous MEXICO CITY)

CANCUN, Mexico, Nov 8 (Reuters) - Hurricane Ida strengthened off the Mexican resort city of Cancun on the Yucatan Peninsula on Sunday as heavy rains caused by the storm killed at least 42 people in El Salvador.

El Salvador's interior minister said more victims were expected to be found as rescue workers moved into areas cut off by mudslides in the Central American nation.

Ida was poised to enter the Gulf of Mexico later on Sunday and could gain additional strength as it churns towards the oil and gas production facilities of the central Gulf before weakening as it nears the U.S. Gulf Coast later this week, the U.S. National Hurricane Center said on Sunday.

Ida reached hurricane status again late on Saturday and packed top sustained winds of near 90 mph (145 kph), the hurricane center said in its 7 a.m. EST (1200 GMT) advisory.

Ida is a Category 1 hurricane, the lowest on the five-step Saffir-Simpson intensity scale, and forecasters said it could strengthen to a Category 2 hurricane later on Sunday. Gradual weakening was expected to begin by late on Monday.

A hurricane warning for the Yucatan Peninsula from Playa del Carmen to Cabo Catoche, north of Cancun was in effect. Such a warning means that hurricane conditions are expected within 24 hours.

The Mexican government urged people to avoid unnecessary travel in the Yucatan Peninsula and imposed restrictions on coastal shipping.

The center of Ida was 70 miles (115 km) east-northeast of the Caribbean resort island of Cozumel, Mexico, and about 85 miles (135 km) south-southwest of the western tip of Cuba, the hurricane center said.

It was moving northwest near 12 mph (19 kph) with a turn to the north-northwest and then north forecast over the next two days.

Ida was forecast to move through the Yucatan Channel and into the Gulf of Mexico later on Sunday, passing close to the northeastern tip of the Yucatan Peninsula, the Miami-based hurricane center said.

Energy companies active in the Gulf of Mexico, including Mexico's state oil monopoly, Pemex [PEMX.UL], are actively monitoring the storm but have not yet evacuated any production platforms or curtailed output of oil and gas.

The Gulf of Mexico accounts for a quarter of U.S. domestic oil production and 15 percent of natural gas output. The Gulf Coast is also home to 40 percent of the nation's refining capacity.

Ida first became a hurricane on Thursday off the Caribbean coast of Nicaragua before weakening over that country. It strengthened again on Saturday.

The storm's heavy rains left forced more than 5,000 people into shelters in Nicaragua but the authorities said there were no reports of fatalities.

The country's coffee crop was not directly affected by the storm, according to the local coffee council.

(Reporting by Michael O'Boyle and Jose Cortazar in Cancun, Nelson Renteria in San Salvador and Ivan Castro in Managua; Writing by Robert Campbell; Editing by Will Dunham and Jackie Frank)

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