Ernesto treks west, hurricane watch in Mexico's Yucatan

* Ernesto expected to make landfall in Mexico

* May reach hurricane strength by mid-week

* Florence weakens in eastern Atlantic (Adds new location for Ernesto)

By Michael Connor

MIAMI, Aug 6 (Reuters) - Tropical Storm Ernesto trekked westwards through the Caribbean on Monday and forecasters issued a hurricane watch for parts of the Yucatan peninsula as the storm looked on course to skirt the Honduran coast, U.S. forecasters said.

Ernesto's outer bands brought winds and rain to Jamaica as it passed south of the island on Sunday but the storm failed to dampen street celebrations there for sprinter Usain Bolt's victory in the 100 meters track final at the Olympics Games.

Heavy rains also lashed Hispaniola and Puerto Rico on Sunday.

Mexico issued a hurricane watch for the east coast of the Yucatan peninsula from Chetumal northward to Punta Gruesa, the U.S. National Hurricane Center in Florida said on Monday.

Tropical storm conditions were expected along the coast of Nicaragua and Honduras by late Monday. A tropical storm warning for Jamaica was canceled, the hurricane center said.

Ernesto was 1 45 miles (2 35 km) east of the Honduras-Nicaragua border at 9 a.m. EDT (1 40 0 GMT) on Monday, moving west at about 12 mph (19 kph) with maximum sustained winds around 50 mph (85 kph). A g radual turn to west-northwest was expected in the next 24 hours.

Its predicted track should keep it at sea until a forecast landfall, possibly at hurricane strength, over Yucatan on Wednesday.

"Some strengthening is forecast as Ernesto moves over the northwestern Caribbean Sea on Monday and Tuesday," the National Hurricane Center forecasters in Miami said.

Ernesto will be deemed a hurricane if its winds reach 74 mph (119 kph).

The forecasters expect Ernesto to move into the southern part of the Gulf of Mexico by Thursday but it was too early to know if it could disrupt oil and gas operations in the gulf.

To the east, Florence, the sixth named storm of the Atlantic-Caribbean hurricane season, weakened and was downgraded to a tropical depression on Monday, the hurricane center said.

With maximum sustained winds of 35 mph (55 kph), Florence was 1,610 miles (2,590 km) east of the Northern Leeward Islands at 5 a.m. EDT (1000 GMT). It is expected to further weaken as it moves west, the hurricane center said.

August and September are usually the most active months of the Atlantic-Caribbean hurricane season, which runs from June 1 to Nov. 30. (Reporting by Michael Connor and Angus MacSwan; editing by Mohammad Zargham)