Sept. 5 (Bloomberg) -- Mattel Inc., the world's largest toymaker, announced its third recall in five weeks after finding about 848,000 Chinese-made Barbie and Fisher-Price products with paint that may contain excessive levels of lead.

The 11 affected toys include Barbie kitchen and furniture items, Fisher-Price train toys and Bongo Band drums, bringing the number of Chinese-made Mattel products recalled since August to 21 million. Mattel gets 65 percent of its toys from China. It said yesterday that no illnesses have been reported.

The latest incident comes as the company prepares for the December holiday season, which generates more than two-thirds of sales. The move is also a setback for China's attempt to restore its reputation as an exporter after recalls and bans prompted by drug-contaminated seafood, toothpaste with an antifreeze ingredient and pet food containing a chemical used in plastic.

``China's manufacturing reputation is definitely being hurt in the eyes of consumers,'' said Alan Oxley, managing director of Melbourne-based ITS Global, which advises companies on trade policy. ``Global brands like Mattel will have to do a lot more to improve their quality control.''

Mattel shares have dropped 6.8 percent since the first recall was announced Aug. 1. The toys Mattel has called back in the past month contained unsafe levels of lead paint or had magnets that children may be able to swallow.

Shares Drop

China is in talks with Mattel to start an investigation into the toy recall, the Chinese quality administrator said in an e-mailed statement today.

Mattel shares rose 1 cent to $21.98 at 4:01 p.m. in New York Stock Exchange composite trading.

Mattel, based in El Segundo, California, has implemented more stringent testing during manufacturing and stopped using some subcontractors. It has finished testing a majority of toys, including all made by vendors.

``China has not proven itself to have a terrific track record,'' said Bob Goldsborough, who helps manage $14.9 billion, including Mattel shares, at Chicago-based Ariel Capital Management LLC.

Safety Review

In China, about half of the company's toys are made in Mattel-owned factories. Of the more than 20 million toys recalled last month, about 18.2 million were Barbie, Polly Pocket and Batman products with magnets. The rest were Sesame Street, Dora the Explorer and other toys with lead paint.

The U.S. Consumer Product Safety Commission is investigating the earlier Mattel recalls and may look at whether the defects were reported to the agency quickly enough. Since 2001, Mattel has been fined more than $2 million for failing to report recalls to the agency in a ``timely manner.''

The toys recalled yesterday totaled 530,700 in the U.S. and 317,400 internationally, Mattel said.

Meglena Kuneva, the European Union's Commissioner for Consumer Affairs, said today in a statement that she would conduct a two-month study of consumer product safety procedures in Europe, including meeting with Mattel executives, to ``check all the links in the chain.''

Paint Not Certified

Vendors who made the toys subcontracted some painting to companies that used paint not certified by Mattel. Lead may be toxic if ingested by children and can cause brain damage, behavior and learning problems and slowed growth, according to the U.S. Environmental Protection Agency.

Mattel will develop an advertising plan addressing the recalls as the holiday season approaches, according to spokeswoman Michele Sturdivant. She didn't provide further details. Mattel ran full-page ads in the New York Times, Wall Street Journal and USA Today on Aug. 14.

``We will continue to focus on ensuring the safety and quality of our toys,'' Chief Executive Officer Robert Eckert, 53, said in a statement yesterday.

No Barbie dolls were recalled, Mattel said. The affected Barbie accessories were sold between October 2006 and August, the safety commission said. Two affected Fisher-Price products were Geo Trax Locomotive toys, sold from September 2006 through August, and Bongo Band toys, sold in July and August, the agency said yesterday in its recall statements.

Mattel said consumers should visit its Web site to find out if they own an affected toy. Consumers will receive replacements and extra parts after mailing back the defective ones.

Product Concerns

Concerns about Chinese products increased earlier this year when melamine, used to make plastic, was found in pet food in the U.S. and blamed for killing cats and dogs, leading to a recall of more than 60 million cans by Menu Foods Ltd.

Chinese officials have pledged to increase quality controls, while stressing that the vast majority of the nation's exports are safe.

The Chinese government has also blamed the media for exaggerating the extent of the problem.

This year, 60 percent of U.S. recalls were of Chinese-made products including vitamins and chocolate, according to New York Democratic Senator Charles Schumer. A U.S. House subcommittee will hold a hearing on lead in children's products on Sept. 19.

(Details on the products being recall can be found at http://www.service.mattel.com or http://www.cpsc.gov.)

To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net.

Last Updated: September 5, 2007 16:19 EDT