Aug 18 (Reuters) - Storm Grace has strengthened into a hurricane just west of Grand Cayman island, and is expected to make landfall in the Yucatan Peninsula on Thursday morning, the U.S National Hurricane Center (NHC) said in its latest advisory on Wednesday. The hurricane, now about 350 miles (560 kilometers) east of Tulum, Mexico, and packing maximum sustained winds of 75 miles per hour (120 kilometers per hour), was projected to move over the southwest Gulf of Mexico early Friday, the NHC said. Reporting by Arundhati Sarkar and Arpan Varghese in Bengaluru Our Standards: The Thomson Reuters Trust Principles.