UPDATE 4-Honeywell posts higher earnings, raises 2011 view

* Q3 EPS $1.10 vs Wall Street view $1.00

* Net income up 45 percent, sales increase 14 percent

* 2011 outlook raised on organic growth expectation

* CEO expects 'a slow-growth economy' in 2012

* Shares up 3.4 percent

Oct 21 (Reuters) - Honeywell International Inc's quarterly earnings significantly outpaced analyst expectations with a 45 percent increase, and the company lifted its full-year outlook.

Shares of the maker of cockpit electronics, auto products and control systems for buildings rose 3.4 percent in morning trading as the company expressed confidence in the near future even as it was seeing signs of an economic slowdown.

Honeywell's earnings were fueled by growth and a recovery of margins in its commercial aerospace business.

Honeywell joins a group of U.S. manufacturers, including General Electric Co , reporting strong earnings and taking a conservative approach in the near term to maintain margin growth.

"What you're seeing in the segment is a pattern where companies are beating their numbers" even as they acknowledge concern over the economy, said analyst Brian Langenberg of Langenberg & Co.

Honeywell reported third-quarter net income of $862 million, or $1.10 per share, attributable to common shareholders, compared with $598 million, or 76 cents per share, a year earlier.

Analysts on average were expecting $1.00 per share, according to Thomson Reuters I/B/E/S.

"Expectations were pretty high in the first place," Langenberg said. "This is a materially better company than a couple years ago ... They managed expectations, but they also managed to beat expectations."

Honeywell said net income included a benefit from a lower tax rate equal to 4 cents a share and other gains equal to 33 cents a share. The company made a voluntary contribution to its underfunded pension during the quarter.

"Excluding this (pension) contribution, Honeywell's earnings roughly matched its free cash flow, an indication that earnings quality remains good," Matt Collins, an analyst with Edward Jones, said in a note to investors.

Aerospace sales rose 8 percent due to increased volume, a favorable product mix and productivity improvements. Profit margins in that segment increased to 18.2 percent.

Honeywell said it experienced profit growth and margin expansion in all business segments.

Sales rose 14 percent to $9.3 billion. Organic sales, or those excluding items like acquisitions, grew 8 percent.

The company raised its 2011 sales forecast to a range of $36.5 billion to $36.7 billion, up about 13 percent over 2010. It previously said it expected $36.1 billion to $36.7 billion.

The new 2011 earnings forecast of $4.00 to $4.05 a share compares with a prior outlook of $3.85 to $4.00.

The company attributed the higher forecast to expectations of growth in its existing units, "despite signals of slower economic growth."

During an interview on CNBC following the earnings release, Chief Executive Dave Cote said the company expected 2012 to be a "slow-growth economy." Honeywell will stay conservative in terms of capital expenditures and hiring, he said.

Collins of Edward Jones said, "While 2012 is expected to be a more challenging year, we expect earnings can continue to grow. With exposure to both commercial aerospace and autos, we believe Honeywell is well positioned to benefit from recovering demand around the world."

Shares of Honeywell were up 3.4 percent at $50.13 in morning trading.