UPDATE 1-FDA backs Astra's Seroquel XR for bipolar disorder

(Updates with further details, sales, analyst comment)

LONDON, Oct 10 (Reuters) - U.S. regulators have approved AstraZeneca's (AZN.L) drug Seroquel XR as a treatment for bipolar disorder, extending the medicine's use beyond schizophrenia, the Anglo-Swedish company said on Friday.

The green light from the Food and Drug Administration makes Seroquel XR the first medication cleared in the United States for the once-daily acute treatment of both depressive and manic episodes associated with bipolar disorder.

Seroquel is the company's second-biggest selling drug, generating $4 billion of sales in 2007.

However, it has been under threat from generic drugmakers seeking to sell cheap copies and AstraZeneca wants to promote the follow-on extended release -- or XR -- form.

"We expect AstraZeneca to initiate a push into switching patients into the XR version," said WestLB analyst Simon Mather, who rates AstraZeneca shares an "add".

The patent on the original formulation of the drug expires in 2011, while the new version is protected until 2017.

AstraZeneca shares were 4.7 percent lower in a sharply weaker market by 1310 GMT, as the European drugs sector .SXDP lost 5.5 percent.

Bipolar disorder, which affects an estimated 8 million adults in the United States, is characterised by manic or mixed mood episodes, interspersed with episodes of major depression. (Reporting by Ben Hirschler; Editing by Hans Peters)