NEW YORK (Reuters) - General Motors Co made a triumphant return to Wall Street less than a year and a half after the government rescued the automaker and forced a massive overhaul but its shares lost momentum after an early bounce.

As some of the automaker’s newest models lined up outside of the New York Stock Exchange, GM shares began trading on the floor of the Big Board to the sound of a revving Camaro engine, taking the place of the traditional opening bell.

Close to 220 million shares had traded by the market close, more than triple the amount of trading in Citigroup Inc, the next most actively traded stock. GM shares also traded on the Toronto Stock Exchange.

The start of trading in GM shares is one of the final steps in an initial public offering process negotiated by the Obama administration that raised $20.1 billion in common and preferred shares, making it the biggest IPO in U.S. history.

The IPO caps the first stage of a turnaround that has taken the 102-year-old automaker from near-death via a 2009 bailout, to unlikely Wall Street flotation favorite in 2010.

A successful stock debut may help the Obama administration argue that the controversial $50 billion taxpayer bailout of GM was worthwhile. The White House said U.S. taxpayers were on track to recoup the full investment made by the administration and that it hoped to make substantial progress shedding the government’s stake entirely by mid-to-late 2012.

“American taxpayers are now positioned to recover more than my administration invested in GM,” President Barack Obama told reporters at the White House on Thursday afternoon.

The government has estimated that an industry failure led by a GM collapse would have cost 1 million jobs, including suppliers, and would have reduced U.S. GDP by 1 percent.

The newly minted shares, which zoomed 9 percent higher shortly after the market opened, trimmed those gains as the day went on even as the broader market rallied, with some speculating that the U.S. government’s stake in the automaker -- expected to drop to about 33 percent -- was still making some investors nervous.

Others pointed out that room for gains was limited after the price range and size of the IPO were both increased in the past week.

“Going forward, I do think that when they raised the IPO price ... probably a lot of gains that I would have anticipated were already priced in, that the government got the profit,” said Bernie McGinn, chief investment officer at McGinn Investment Management in Alexandria, Virginia, who owns Ford stock. “I wouldn’t expect a lot on the upside, I wouldn’t expect a lot on the downside for GM.”

The IPO valued GM at about $63 billion. Including a yet-to-be exercised option that allows underwriters to sell more shares depending on demand, GM looks set to raise $23.1 billion, eclipsing the record $22.1 billion raised by Agricultural Bank of China in July.

The offering’s success was a feather in the cap of the lead underwriters on the deal, Morgan Stanley, JPMorgan, Bank of America Merrill Lynch and Citigroup.

The IPO is set to generate up to $273.6 million in underwriting fees including the overallotment option for common and preferred stock in the offering, according to a regulatory filing by the automaker.

JOB NOT DONE

The team of GM executives led by Chief Executive Dan Akerson that pitched the IPO to investors said they recognized their job in transforming GM was not done.

“We have to celebrate on the run here,” GM North America President Mark Reuss told Reuters. “It’s a big day to become a public company again but we have got to just hit the ball out of the park here every day on product.”

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Chief Financial Officer Chris Liddell said the automaker’s goal was to pay down all of its remaining debt and fully fund its pension plan, removing one of the concerns investors had cited heading into the IPO.

“We are in a good position to do that over the next few years,” Liddell told Reuters Insider.

At $33 a share, the partial sale represents a loss of about $9 billion on taxpayers’ original investment, assuming the extra shares go at the same price.

To break even on the bailout, the Treasury would have to average near $52 per share on its remaining stock sales, more than 50 percent above GM stock’s closing price on Thursday. GM shares gained 3.6 percent to close at $34.19, trimming gains from an earlier high at $35.99.

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China’s SAIC Motor Corp confirmed on Thursday that it bought a 1 percent stake in GM. The state-run Chinese automaker said it expected its cooperation with GM would broaden to include more technology sharing and “exploration of overseas markets.”

HOPE

The reversal in GM sentiment over the last year pointed to renewed confidence in an industry that faced collapse before unprecedented government intervention. It also offers hope for others, including smaller automaker Chrysler, looking to tap credit and equity markets in coming months, analysts said.

Shares of GM rival Ford Motor Co, which had risen by 17 percent so far in November -- mostly on anticipation of the GM IPO -- closed 3.4 percent lower on Thursday.

The GM IPO was the first major test for GM’s new management team led by Akerson, 62, a former head of buyouts at The Carlyle Group.

“The new leadership team is doing very good work. Market share is up, prices per unit are up,” said Xavier Mosquet, a senior partner at The Boston Consulting Group who advised the Treasury on its intervention into the U.S. auto industry.

GM is on track for its first full-year profit since 2004.

It has touted its market-leading position in fast-growth emerging markets led by China, and success with redesigned cars like the Buick LaCrosse, as well as the ability to innovate through the crisis embodied Chevy’s Volt plug-in hybrid.

GM’s Volt, a key link in the automaker’s thrust to reinvent itself, was named 2011 Green Car of the Year by Green Car Journal on Thursday.

Analysts still see challenges for GM, including the overhang of the U.S. government’s post-IPO ownership stake.

Other investor concerns include continued losses in GM’s European arm -- $1.3 billion over the past three quarters -- and contract talks next year with United Auto Workers.

Post-IPO, a union health care trust will keep 13 percent of GM shares with a board seat representing its interests.