NEW YORK (Reuters) - New York Attorney General Eliot Spitzer said on Wednesday he has sued British drugmaker GlaxoSmithKline Plc, claiming fraud over its antidepressant drug Paxil.

The lawsuit claims that starting in 1998, Glaxo engaged in a concerted effort to withhold negative information about Paxil and misrepresented data about its safety and efficacy in children and adolescents.

The suit claims Glaxo conducted at least five studies on the use of Paxil in children and adolescents but published only one, which had mixed results. It claims the company suppressed negative results from the other studies, which did not show that Paxil worked and may even have suggested an increased risk of suicide.

Glaxo spokeswoman Mary Ann Rhyne said the allegations are untrue. She said the company disseminated information about all its trials either in a medical journal or at a public scientific meeting as well as to regulatory agencies.

Glaxo's shares fell 2.9 percent to 1,111 British pence on the London Stock Exchange and fell 3.41 percent to $41.31 in early afternoon trading on the New York Stock Exchange.

"I think it is bad publicity but other than that I don't think it will impact on Glaxo's long-term value," said Max Hermann, an analyst at ING Financial Markets.

Spitzer demands Glaxo give up all profits obtained through the claimed misconduct.

The suit comes amid growing controversy over the effectiveness and potential side effects in children of antidepressants. In March, the U.S. Food and Drug Administration asked manufacturers to change the labels on 10 drugs to include larger and more prominent warnings about patient monitoring.

Spitzer's suit, filed in New York State Supreme Court in Manhattan, claims Glaxo also misrepresented the results of its research to its sales representatives, saying the drug had "remarkable efficacy and safety in the treatment of adolescent depression."

And it says an internal Glaxo memo from 1999 shows that Glaxo intended to "manage the dissemination of the data in order to minimize any potential negative commercial impact."

Rhyne said the "memo is inaccurate, inconsistent with the facts, and did not express the overall company position."

More than 2 million prescriptions for Paxil were written for children and adolescents in the United States in 2002, even though the drug is approved by U.S. regulators only to treat adult depression. Physicians, however, have the ability to prescribe Paxil for children.

Eli Lilly & Co.'s Prozac is the only drug to be approved for children.

"The drug makers need to have better warnings and they've known they need better warnings for a long time," said Jim Fitzgerald, a lawyer with Fitzgerald Law Firm in Wyoming, who won a $6.4 million verdict against SmithKline Beecham in 2001 after he sued on behalf of a man who killed his family while on Paxil. SmithKline Beecham later merged with Glaxo Wellcome to form GlaxoSmithKline.

Glaxo is not the only maker of antidepressants under fire. Concern centers on the whole class of drugs known as selective serotonin reuptake inhibitors, which include Paxil, Prozac, Pfizer's Inc.'s Zoloft and Forest Laboratories Inc.'s Celexa. Prozac has so far been excluded from regulatory concerns and appears to be effective in treating children.

Karen Barth Menzies, an attorney in Los Angeles who is suing Pfizer on behalf of a 12-year-old boy who killed his grandparents and burned down the house while on Zoloft, said "there is absolutely similar evidence being used against Glaxo that can be used against Pfizer."