NEW YORK (Reuters) - Bermuda-registered conglomerate Tyco International Ltd. denied on Friday rumours it was interested in buying diversified manufacturer and defense contractor Honeywell International Inc.

The rumours were behind a drop of up to nine percent in Tyco's share price on Friday, traders and analysts said. The stock recovered somewhat in after-hours trading, to $51.50 on Instinet, up from its close at $50.25 on the New York Stock Exchange.

``It is absolutely untrue. There are no talks and there is no interest,''

said Tyco spokeswoman Maryanne Kane.

Analyst Phua Young of Merrill Lynch called the speculation ''ridiculous.''

``Honeywell is not for sale,'' he said. ``Clearly there are folks out

there that want to see the stock go down.''

Analysts also said a rumour that a negative article about Tyco would appear in the New York Times also may have hurt the stock.

``There's been a lot of rumours in past week,'' said analyst Jeff Sprague of Salomon Smith Barney.

Morristown, New Jersey-based Honeywell, which makes products ranging from aircraft electronics to home security systems, sold two of its businesses to General Electric Co.'s Power Systems unit, after its merger with GE was nixed by European regulators in July.

But Honeywell Chief Executive Lawrence Bossidy has repeatedly stated he plans to keep the company independent.

Shares of that company fell 25 cents to $33 in after-hours trading on Instinet, from the close at $33.25 on the NYSE.

Acquisitive Tyco - which controls more than 200 business, including electronics makers and fire and security services - also saw its shares tumble last Thursday. Queasy investors reacted to a research report that speculated about whether the Bermuda-based company was the subject of a new investigation by the Securities and Exchange Commission.

Tyco had said a day before the report, issued by private research firm SEC Insight Inc., that it was not the subject of a new SEC probe.