Italy recalls contaminated mozzarella cheese

(Adds France lifting sales ban, waiter's comments)

By Phil Stewart

ROME, March 28 (Reuters) - Italy ordered a recall on Friday of mozzarella cheese potentially contaminated with cancer-causing dioxin, as a widening health scare tainted the reputation of one of its best-known culinary products.

Italy's Health Ministry said it was withdrawing products from 25 companies in Campania region, where Italy's best buffalo mozzarella is produced.

France briefly prohibited sales of some Italian mozzarella on Friday, but revoked the ban hours later after winning Rome's assurances that none of the suspect cheese was exported there. Japan and South Korea had already blocked imports.

The European Commission, which had previously threatened a trade ban unless Rome acted more aggressively, said it was satisfied with Italy's latest effort to contain the scare.

Italian Foreign Minister Massimo D'Alema played down the health risks even as he announced a recall affecting an industry which employs 20,000 people and is worth about 300 million euros ($475 million) a year.

"This is a limited phenomenon and once the (recall) measures are completed, we're convinced that we can restore confidence in the quality of a product that remains a symbol of Italian gastronomy," he said.

In Brussels, the European Commission said Italy had also pledged to carry out "constant monitoring" of production sites to ensure no further cases of mozzarella cheese were found with dioxin levels exceeding EU limits.

"Taking into account the information that was given today, there is no reason at this stage to take further action at EU level," said Nina Papadoulaki, Commission health spokeswoman.



GARBAGE CRISIS

Italian health officials believe the dioxin is linked to a recent garbage crisis in Naples and the surrounding Campania region.

With dumps in the area full, locals burned piles of rubbish in the streets and in open fields. Health officials say industrial waste was also set ablaze, spreading fumes that in some cases contained dioxin, a toxic chemical.

The bad publicity has made some Italian consumers wary. One mozzarella dealer in Rome said sales to hotels and restaurants had fallen by half.

"We are at the historical minimum level of sales," said dealer Paolo Micocci, comparing the mozzarella scare to panic over mad cow disease and bird flu.

"Scares have hit cows, then fish with mercury, then chicken. ... Now, it's our turn. We'll hang in there."

Italy produces about 33,000 tonnes of buffalo mozzarella a year, with 16 percent of it sold abroad, mostly in the European Union. France and Germany are the major importers but sales have been expanding to other countries, including Japan and Russia.

Italy hopes the recall inspires confidence among consumers, showing officials are ready to act on their behalf. People in the food business say restoring trust will be key.

"It depends on clients, if they will continue to trust us or not," Oreste Giannini, head waiter at a Rome restaurant.

"We will keep trying to sell (mozzarella). We'll see if people will keep eating it or not."

(Additional reporting by Crispian Balmer in Paris, Jeremy Smith in Brussels, Erik Kirschbaum in Berlin, Roberto Landucci and Antonio Denti in Rome, and Svetlana Kovalyova in Milan, editing by Mary Gabriel)