SHANGHAI (Reuters) - China has held seven people in southern Guangdong province for injecting dirty pond water into lamb meat to swell its weight and raise its price, state television reported in the latest food scandal to hit the world's second largest economy.

The suspects slaughtered up to 100 sheep per day at an illegal warehouse, pumping bacteria-ridden water into the meat before it was sold at markets, food stalls and restaurants in major cities such as Guangzhou and Foshan, China Central Television (CCTV) said in a three-minute report.

China has been hit by a number of food safety scandals, from deadly chemical-laced dairy products to recycled "gutter oil" used for cooking.

Last week, Wal-Mart Stores Inc <WMT. N>, the world's largest retailer, apologised after a Chinese supplier of donkey meat snacks was found to have mixed fox meat into the product.

Authorities raided the illegal lamb meat abattoir in Guangdong at the end of December, finding around 30 carcasses injected with water, 335 live sheep, forged inspection stamps, and equipment to inject water into the meat, the report showed.

Each sheep was pumped with up to six kilograms of water just after being slaughtered, to add extra weight.

Close to 40 percent of Chinese think food safety is a "very big problem," the Pew Research Centre said in a 2013 report. This has weighed on Chinese firms, from milk powder makers to meat producers, boosting international rivals.

Late in December, China said it would tighten milk powder rules in a move to boost confidence in domestic producers and allay long-standing fears around food safety in its $12.4 billion infant formula market.

KFC parent Yum Brands Inc <YUM. N>, McDonald's Corp <MCD. N>, French grocery chain Carrefour SA <CARR. PA> and other global firms have been caught up in food safety scares in China.

(Reporting by Adam Jourdan and SHANGHAI newsroom; Editing by Clarence Fernandez)

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