News Corp Chief Executive Rupert Murdoch said on Tuesday he didn't believe speculation that New York Times Co would be bought by Mexican billionaire Carlos Slim.

Murdoch was speaking at a Real Estate Board of New York event, where he announced plans by his company's Wall Street Journal business newspaper to launch a New York section to rival content in the Times.

New York Times shares spiked as much as 11 percent on Monday after rumors spread that Slim, who already owns 7 percent of Times stock, was looking to raise his stake to assume control of the business.

Shares of New York Times, which is controlled by the Ochs-Sulzberger family, dipped 1.45 percent on Tuesday.

I don't believe it, said Murdoch of the rumor. The family treats it as a great heritage.

He added that he doubted the family would sell to an outsider unless the family had to but least of all to a Mexican.

Murdoch clarified that I don't mean that racially. He said Slim, a telecommunications tycoon, was too smart and sensitive to do such a deal.

On Monday, a close aide to Slim told Reuters that the billionaire was happy with his current investment in New York Times.

Murdoch said the new Wall Street Journal New York section will be launched next month in full color and would cover state politics, local politics, business, culture, sports and real estate.

He said the new Journal section would be feisty and would compete with its sister paper, the New York Post.

As well as the Post and New York Times, the Journal's new section would also compete with the New York Daily News, published by Mort Zuckerman.

However, Murdoch was complimentary about Zuckerman's role in New York and referred to stories that he might run for a U.S. Senate seat from New York.

You probably never thought you'd hear me saying this about a rival publisher -- but I believe Mort Zuckerman would improve that Senate race just by his entry, said Murdoch.

Murdoch said there are no plans to launch a Sunday section for the Journal but it may expand its Saturday edition.

Murdoch has continued to champion the future of newspapers in a digital age even as consumers expect to get content for free over the Web.

He said newspapers would benefit from new devices Apple Inc's iPad which his company is working with under lock and key. He predicted the launch of six to eight new e-reader devices by the end of the year that would benefit newspapers by charging for content.

But he was less sure of the future for Amazon.com Inc's Kindle e-reader device, saying it was best just for reading books.

I think the Kindle's had it he said.

New York Times shares closed down 17 cents at $11.58 on the New York Stock Exchange, while News Corp closed up 8 cents at $13.84 on Nasdaq.

(Reporting by Yinka Adegoke; Editing by Gerald E. McCormick and Richard Chang)

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