UPDATE 1-Character says new tests show Go Go Pets are safe

* Character says Go Go Pets meet Euro safety standards

* Company says new tests were conducted overnight

* Cepia considers proceedings against GoodGuide

(Adds detail)

LONDON, Dec 7 (Reuters) - British toy distributer Character Group (CCT.L) moved to reassure customers that its best-selling Go Go Hamsters toys were safe, after a U.S. consumer body said a chemical found in the products was at possibly dangerous levels.

Character said on Monday the toy, made by American manufacturer Cepia, was found to comply with "stringent safety and quality standards and regulations imposed by the European authorities" in new tests held overnight in Hong Kong.

U.S. consumer organisation GoodGuide had said that one item in the range, the hamster Mr Squiggles, contained more than the allowed level of the chemical antimony.

"We take all reasonable steps to ensure that all our products, both those we design and develop under our own brand and those we distribute on behalf of other manufacturers, are safe and fully compliant with all applicable standards," Character's Executive Chairman Richard King said in a statement.

"The disruption to the retail toy trade by the publication of unfounded claims and views at this important time of year is not fair to the UK toy trade, which goes to great lengths to sell and promote only safe toys."

Character holds British distribution rights to Go Go Pets, a range of interactive hamsters, which respond to noise and touch, and retail from an opening price point of 10 pounds ($16.45).

Cepia has referred the incident to its U.S. legal team and is considering proceedings against GoodGuide, Character said in its statement.

Shares in Character recovered to be 0.75 percent down at 66 pence by 1550 GMT after having been as much as 17 percent lower at 55 pence in earlier trade.

The fuzzy, electronic toy hamsters have featured on many lists of the season's top toys and are flying off the shelves at major outlets like Walmart and Toys "R" Us at about $8 each in the U.S. -- but selling for up to $100 on sites like Amazon.com and eBay.com. [ID:nSP44196]

Character's finance director last week said Britain's children could be left disappointed this Christmas due to a shortage of some of its most popular lines, including Go Go Pets. [ID:nGEE5B00FF] (Reporting by Rhys Jones; Editing by Matt Scuffham and Rupert Winchester)