Shares in Danone drop 1.4 percent, the biggest losers on France's CAC 40 after Fonterra, the world's biggest dairy exporter, said it had found bacteria in some products that could cause botulism, with contaminated whey protein concentrate shipped to a number of countries including China.
In response, China has halted the import of some dairy products from New Zealand and Australia, and food producers including Danone said they have recalled products that may have contained the contaminated whey.
"The damage seems to be limited, and it looks that the companies involved have quickly identified the problems and are fixing it. It shouldn't drag Danone shares more than that."
Nestle is up 0.3 percent, in line with the broader market, while Irish food group Kerry is down 0.4 percent.
