UPDATE 3-Nestle rejects Saudi milk contamination finding

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By Souhail Karam

RIYADH, Dec 3 (Reuters) - Saudi Arabia said on Wednesday that harmful concentrations of melamine had been found in milk powder made by a Nestle (NESN.VX) plant in China but the world's largest food group rejected the findings.

"All Nestle dairy products sold in Saudi Arabia -- just as anywhere else in the world -- are absolutely safe for consumption. No Nestle product is made from milk adulterated with melamine," Nestle said in a statement.

Saudi Arabia's Food and Drug Authority reported on its website (www.sfda.gov.sa) that high concentrations of the industrial chemical were found in products sold in the kingdom and warned consumers they could be harmful to health.

Shares in Nestle closed down 0.56 percent at 42.46, paring earlier losses as global markets rallied, compared to a flat Dow Jones Stoxx European food and beverage index .SX3P.

Saudi Arabia named the product as a 400-gramme pack of Nesvita Pro Bones and said the batch was produced on May 6, 2008 by a Nestle plant in China. The authority said the product must not be used by consumers of any age.

It said it had also found melamine concentrations harmful to chidren in three other batches of the same brand, in 1,800- and 900-gramme packs made Nov. 19, 2007 and on Feb. 25, 2008.

Nestle said it had organised a withdrawal of Nesvita Pro Bones Low Fat after a request from Saudi Arabia on Oct. 18 to pull milk products made in China, pending results of tests.

Nestle said its tests on the product -- as well as those by an independent laboratory -- gave results well below limits defined by the World Health Organisation (WHO) as well as by authorities in Canada, New Zealand and the European Union.

Nestle made similar comments in October after Taiwan health officials ordered stores there to remove six types of Nestle dairy products after tests found traces of contamination.

Nestle said then its products were safe, adding that Taiwan's standards were 50 times stricter than global norms.

TESTS ON CHINA-MADE PRODUCTS

The Saudi agency said it also found melamine in a chocolate wafer cream it identified as "Apollo" made by Malaysia-based ApolloFood Industries on June, 5, 2008.

The authority said it had tested 52 milk powder products, none intended for consumption by babies. All of the products were made in China or in countries which have found melamine-tainted products, it added.