Wednesday, Dec 03, 2008

(Updates with further details, background.)

DUBAI (Zawya Dow Jones)--Saudi Arabia's Food & Drug Authority has found "highly harmful" traces of melamine in some Nestle S.A. (NESN.VX) milk products.

In a statement posted late-Tuesday on its Web site, the authority said it has detected melamine in four different products of China-made Nestle milk powder, and one product of Malaysia-made Nestle chocolate wafer.

"The authority warns against using these products by children, and advises against consuming it by other age groups," the statement said.

Officials at Nestle weren't reachable for comment.

Last month, Taiwan ordered stores around the island to remove six types of China-made Nestle dairy products after traces of melamine were found in them as well.

The warning by the Saudi authority will impact Nestle's sales in Middle East's largest economy and could impact the company's products elsewhere in the Persian Gulf's Arab states.

The warning is the first incident of melamine contamination in the kingdom since the chemical was found in Chinese milk products earlier this year.

-By Majdoline Hatoum, Dow Jones Newswires; +9714-364-4964; majdoline.hatoum@dowjones.com

Copyright (c) 2008 Dow Jones & Company, Inc.

(END) Dow Jones Newswires

03-12-08 0928GMT