NEW YORK (Reuters) - A close friend of Martha Stewart admitted on Friday that some of her most damaging testimony against the domestic trendsetter may have been a figment of her imagination.

The dramatic testimony of Mariana Pasternak, whose friendship with Stewart goes back 20 years, took a strange twist as she conceded under cross examination that parts of the testimony she gave on Thursday could be fabrications.

At issue is testimony the friend offered in which she said Stewart boasted "Isn't it nice to have brokers who tell you those things" during a vacation in Mexico just after the trendsetter dumped her shares of ImClone Systems Inc.

Stewart's attorney pressed the witness about that statement on Friday, asking whether that conversation had actually taken place or if it was all in her head.

"I do not know if the statement was made by Martha or if it was thought in my mind," Pasternak said. She also said she previously told prosecutors that she was not sure about that recollection.

Stewart's comment about "those things" appeared to be a reference to what prosecutors say was a secret stock tip she received that ImClone's (IMCL.O) founder and his family were selling their shares in the biotech company.

Stewart and her former stockbroker, Peter Bacanovic, have been charged with lying to investigators about the ImClone trade. The two counter that they had a pre-existing arrangement to sell ImClone shares if the price fell below $60, and that Stewart was never tipped off about Waksal's trade.