The Shanghai Food and Drug Administration said in a statement dated on Friday that a sample contained suspicious levels of amantadine, a drug used to treat Parkinson's disease. The watchdog said the drug is banned for use in food.

The safety authority has asked Yum to recall related products from its KFC restaurants and has launched a city-wide inspection of KFC outlets, it said.

The Shanghai inspection comes after state-run China Central Television reported last week that some of KFC's chickens had high levels of antibiotics.

KFC's parent company Yum could not immediately be reached for comment, but KFC's subsidiary in China earlier pledged to cooperate with the authorities.

China has been trying to stamp out health violations that have dogged the country's food sector amid reports of fake cooking oil, tainted milk and exploding watermelons. In 2008, milk laced with the industrial chemical melamine killed at least six children and sickened nearly 300,000.

In China, KFC's parent company Yum faces fierce competition from rivals such as McDonald's Corp (MCD.N) and Taiwanese-owned fried chicken chain Dico. Yum Brands has forecast a drop in same store China sales in the fourth quarter.

(Reporting by Samuel Shen and Melanie Lee; Editing by Daniel Magnowski)

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