UPDATE 1-Kidnapped Afghan diplomat recovered in Pakistan

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ISLAMABAD, Sept 29 (Reuters) - Afghanistan's top diplomat in Pakistan, ambassador-designate Abdul Khaliq Farahi, was "recovered" on Monday, a week after gunmen kidnapped him and killed his driver, Pakistani officials said.

"He has been recovered," said an intelligence agency official who declined to be identified.

He declined to give details of how Farahi was freed.

A government official said Farahi, who was kidnapped in the northwestern city of Peshawar when gunmen ambushed his vehicle on Sept. 22, had been taken to the capital, Islamabad.

No group claimed responsibility for abducting Farahi and there were no reports of demands for his release although Islamist militants were suspected.

Farahi's kidnapping compounded fears about deteriorating security in the nuclear-armed Pakistan.

He was abducted two days after a suicide truck bomber killed 55 people in an attack on a hotel in the heart of Islamabad.

Relations between Pakistan and Afghanistan, both important U.S. allies, have warmed since Asif Ali Zardari, the widower of former Pakistani prime minister Benazir Bhutto, took over as president.