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UPDATE 1-GM to settle state ignition claims for $120 mln

(Adds GM statement, NY AG, background, details of settlement)

WASHINGTON, Oct 19 (Reuters) - General Motors Co on Thursday agreed to pay $120 million to resolve claims from 49 U.S. states and the District of Columbia over faulty ignition switches, state attorneys general said.

The largest U.S. automaker had previously paid about $2.5 billion in penalties and settlements over faulty ignition switches that could cause engines to stall and prevent airbags from deploying in crashes. The defect has been linked to 124 deaths and 275 injuries, and prompted a recall that began in February 2014.

GM spokesman David Caldwell confirmed on Thursday the Detroit automaker had reached a settlement with states over the more than three-year-old consumer protection investigations.

Caldwell said the settlement assures "GM will continue ongoing improvements its made to ensure the safety of its vehicles. These improvements include continuation of a new organizational structure devoted to global vehicle safety and the companys Speak Up for Safety program."

New York Attorney General Eric Schneiderman said in a statement GM had "turned a blind eye for years and chose to conceal the safety defects associated with several models of their vehicles."

As part of the settlement, GM dealers must not sell certified preowned vehicles with uncompleted recalls.

In 2015, GM paid $900 million to settle a U.S. Justice Department criminal investigation and agreed to three years of oversight by an independent monitor after being charged with wire fraud.

No individuals were charged, but Chief Executive Mary Barra fired 15 people, including eight executives, over the issue.

The states said GM knew as early as 2004 that the ignition switch posed a safety defect because it could cause airbag non-deployment, but company officials decided it was not a safety concern and delayed making recalls.

The recalls prompted an industry wide jump in recalls in 2014 to an all-time record and cast a spotlight on GM's safety record as Barra testified before the U.S. Congress.

(Reporting by David Shepardson)