* Kiwi suffers steep fall, hits lowest in more than a year
* Fonterra says botulism bacteria in some of its products
* Aussie dlr hits 3-year low on lacklustre retail sales
* USD nurses losses after jobs data disappoints some
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, Aug 5 (Reuters) - The New Zealand dollar skidded to a one-year low on Monday as investors feared the worst after major dairy exporter, Fonterra, found botulism bacteria in some of its products.
Fonterra, the world's biggest dairy exporter, said over the weekend that contaminated New Zealand-made whey protein concentrate had been exported to China, Malaysia, Vietnam, Thailand and Saudi Arabia.
In response, China has halted all milk powder imports from New Zealand and Australia, New Zealand Trade Minister Tim Groser said on Sunday. Fonterra issued a statement to the New Zealand stock exchange saying it had yet to hear officially of any product ban.
The kiwi was marked as low as $0.7670, versus around $0.7840 late in New York on Friday, reaching lows not seen since June 2012. Solid support is seen around $0.7500, lows seen in May/June 2012. It has since recovered to $0.7750.
"It's a pretty serious development for New Zealand given how important dairy is. But what usually happens with these food quality issues is that as details come out, people tend to feel more reassured," said Chris Tennent-Brown, FX economist at Commonwealth Bank in Sydney.
Another big mover on Monday was the Australian dollar, which hit a three-year low after weaker-than-expected retail sales data reinforced expectations of further interest rate cuts by Australia's central bank.
The Aussie dollar touched a low of $0.8848, its lowest level since August 2010. The Aussie last stood at $0.8865, down 0.5 percent from late U.S. trade on Friday.
The Reserve Bank of Australia is widely expected to cut interest rates to a record low of 2.5 percent on Tuesday, following dovish comments last week from RBA Governor Glenn Stevens. Some market players suspect that the central bank could ease policy further later this year.
Other major currencies were calmer, with the U.S. dollar struggling to gain traction after a closely watched report on Friday showed U.S. employers slowed their pace of hiring in July.
The U.S. payrolls report was seen making the U.S. Federal Reserve more cautious about drawing down its huge economic stimulus programme, and cast some doubt on whether the Fed would start reducing its bond purchases in September.
A Reuters poll on Friday found that fewer U.S. primary dealers expect the Fed to begin reducing economic stimulus in September than they did a month ago, with dealers now split over whether the central bank will cut back on buying in September or in the following few months.
"We've seen a correction in the U.S. dollar back to the downside. In the very short term, given positioning, it may extend further," said Callum Henderson, global head of FX research for Standard Chartered Bank in Singapore.
The dollar fell 0.2 percent to 98.77 yen. The euro eased 0.1 percent to about $1.3276, after having risen 0.5 percent versus the dollar on Friday.
Currency speculators still have a net long position in the dollar, although they pared back such bets in the latest week, according to data from the U.S. Commodity Futures Trading Commission.