(Adds Hungary comment, retail sales, paragraphs 6, 9-10)

By Peter Graff

LONDON, Feb 9 (Reuters) - Britain's food watchdog said on Friday it was investigating whether meat contaminated with bird flu had reached shops, but said there was no threat to consumers.

The alarm was raised after the government concluded on Thursday that a bird flu outbreak at a giant turkey farm was probably caused not by wild birds but by contaminated shipments from Hungary, possibly of processed turkey meat.

"If it was found that (infected) meat had got into the food chain it would be illegal and we would take appropriate action," a Food Standards Agency spokeswoman said.

"I couldn't tell you what we would do. But we wouldn't want that meat there. At the moment we are not in the process of withdrawing any turkey products from supermarket shelves."

She added: "If infected meat had got into the food chain it wouldn't be a safety risk to consumers."

Supermarket chain Sainsbury's <SBRY.L> reported a 10 percent drop in poultry sales over the past five days compared with a year ago, although other retailers said they had seen no impact.

Bernard Matthews, Europe's largest turkey producer which has had 160,000 birds destroyed after Britain's first outbreak of the H5N1 strain of bird flu in domestic poultry last week, has acknowledged shipping 38 tonnes of partially processed turkey meat from Hungary per week.

The firm suspended shipments from Hungary after the British government concluded on Thursday that the virus which caused the outbreak was identical to one found in Hungary in January.

But Hungarian poultry processing firm SaGa Foods Zrt, a unit of Bernard Matthews, said its exported products could not be the source of a bird flu outbreak in Britain.

SaGa said in a statement its export shipments did not carry any infection and its products met food safety requirements. It added it did not do any business with the goose farms in eastern Hungary where bird flu was detected last month.

MOVEMENTS OF MEAT

British officials initially said they believed the virus was brought to Britain by wild birds and was unlikely to have been linked to the Hungarian outbreak weeks earlier. But they changed their minds on Thursday, saying they now believe the strain found in Britain was identical to that found in Hungary.

The virus may have been brought to Britain from Hungary in turkey meat, or by contaminated vehicles, Britain's deputy chief veterinarian Fred Landeg told BBC radio.

"The virus has got here somehow. We are focusing our investigation ... on possible movements of poultry meat and vehicles from Hungary, and possibly personnel," he said. "There is quite a lot of movement of poultry and poultry products within Europe. Those are legitimate and legal movements."

Hungarian officials said they too were checking whether there was a link between the two outbreaks, but expressed scepticism that live British birds could have been contaminated by virus present in processed meat.

"In theory a link is possible, but in practice it is very difficult to imagine that," Chief Veterinarian Miklos Suth told Reuters, adding the virus in Hungary hit geese not turkeys.

The H5N1 virus has spread into the Middle East, Africa and Europe since it re-emerged in Asia in 2003 and although it remains largely an animal disease, it can kill people who come into close contact with infected birds.

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