DETROIT (Reuters) - General Motors Corp. was hit with a lawsuit on Monday claiming that it misled investors about its financial outlook before the dramatic earnings warning GM issued in March that battered its shares and debt.

New York-based law firm Milberg Weiss said it filed the suit, which seeks class action status, in federal district court in New York. The suit covers the period from Feb. 25, 2002, to March 16, 2005, a period when the law firm said GM (Research) issued more than $18 billion in shares, bonds and other debt securities.

The suit alleges that "the company's debt ratings were materially inflated by defendants' materially false and misleading statements and omissions."

"When the true facts finally began to come out at the end of the Class Period, the price of GM stock, which had closed at $32.71 on March 15, 2005, declined by $4.57 per share, or 14 percent, to close at $28.14 per share on March 16, 2005. The prices of the company's debt securities also declined in the market," the law firm said.

On March 16, GM, the world's largest automaker, shocked markets by warning that its full-year 2005 earnings would be as much as 80 percent below its prior forecast.

At the time, GM cited slumping North American auto sales. In April, GM posted a quarterly loss of $1.10 billion, its worst result since it narrowly skirted bankruptcy in 1992.

GM spokeswoman Toni Simonetti declined to comment on the legal action, which names GM chairman and chief executive Rick Wagoner and chief financial officer John Devine among the defendants along with GM's financial arm, General Motors

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