MEXICO CITY, May 22 (Reuters) - Mexican President Andres Manuel Lopez Obrador on Monday said his government was willing to pay compensation - if necessary - and reach an agreement with Grupo Mexico's transport unit after a takeover of part of the company's rail network.

On Friday, the government had issued a decree that ordered a "temporary" takeover of around 120 km (75 miles) of the company's network in Veracruz state.

The railway is part of the Inter-Oceanic Corridor, which aims to modernize the link between the Pacific and Gulf coasts to create a trade route.

"We are always looking to reach agreements," Lopez Obrador said during his regular press conference, insisting that the government had merely withdrawn a concession because the area was "strategic".

Lawyers from Grupo Mexico proposed a government payment of 9.5 billion pesos ($534.4 million), he said.

Shares of Grupo Mexico's transport unit were down more than 3.7% on Monday.

Train services in the railway section have continued.

Even so, the news on Friday rattled analysts and investors, many of whom called the move an expropriation.

"This news could be a factor of short-term volatility in the name and listed companies operating concessions," analysts at financial group Actinver wrote. It was more about the symbolism of the move than the move itself, they added.

Grupo Mexico is led by German Larrea, one of Mexico's richest men, who also emerged as one of the possible buyers of U.S. Citigroup's retail banking unit, known as Banamex.

($1= 17.7767 pesos)

Reporting by Noe Torres and Valentine Hilaire

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