Corrects August 23, 2018, article to describe Roundup as an herbicide, not a pesticide, in headline and paragraphs 1 and 3

By Jonathan Stempel

Aug 23 (Reuters) - General Mills Inc GIS.N agreed to stop calling the oats in its Nature Valley granola bars 100 percent natural to settle a lawsuit by three consumer groups that said the bars contained small amounts of the herbicide commonly known as Roundup.

Beyond Pesticides, Moms Across America and the Organic Consumers Association on Thursday said the settlement calls for General Mills to remove the phrase "Made with 100% Natural Whole Grain Oats" from Nature Valley labels.

The groups said independent tests showed that the granola bars contained 0.45 parts per million of glyphosate, and that oats were the "most likely" source of the herbicide.

While this was below the maximum 30 parts per million that the U.S. Environmental Protection Agency recommends, the groups said General Mills' label was deceptive and that "no reasonable consumer" would expect the bars to contain anything unnatural.

"Nature Valley is confident in the accuracy of its label," General Mills spokesman Mike Siemienas said in an email.

He said the Minneapolis-based company settled to avoid the cost and distraction of litigation, and focus on making Nature Valley products "with 100 percent whole grain oats."

The settlement came 13 days after a San Francisco jury ordered Monsanto Co to pay a school groundskeeper $289 million after he said his exposure to its Roundup weed killer and another glyphosate herbicide caused his non-Hodgkin's lymphoma.

Bayer AG BAYGn.DE, which now owns Monsanto, has said it would appeal the jury's verdict.

The General Mills lawsuit was one of many accusing food companies of using deceptive labels, including terms such as "natural" that do not have clearly understood meanings, to induce consumers to buy or pay more for their products.

In July 2017, a Minneapolis federal judge dismissed a proposed class action lawsuit over General Mills' "100% Natural" label, saying that even if the oats contained traces of glyphosate, "there is no allegation that the oats, themselves, are not natural."

A subsequent appeal was dismissed.

The consumer groups had sued General Mills two years ago in Superior Court in Washington, D.C.

The Organic Consumers Association sued Unilever Plc UNc.AS ULVR.L in the same court on July 9 over its labeling for Ben & Jerry's ice cream, including a claim over the use of glyphosate.

(Reporting by Jonathan Stempel in New York; Editing by Dan Grebler and Phil Berlowitz)

((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters Messaging: jon.stempel.thomsonreuters.com@reuters.net))