SHANGHAI, Sept 22 (Reuters) - U.S. food firm OSI Group LLC has cut 340 jobs at its embattled Shanghai plant, which supplied McDonald's Corp and Yum Brands Inc , bringing the facility close to shutdown, the firm said in a statement on its website on Monday.

OSI's Shanghai Husi Food Co Ltd plant came under the spotlight in July when an undercover Chinese media report showed workers were using expired meat and doctoring production dates.

The scandal, which spread as far as Hong Kong and Japan, sparked a Chinese probe into the firm and dragged down China sales at KFC-parent Yum and McDonald's, which have both since cut or suspended ties with Aurora, Illinois-based OSI.

"Over the past two months, Shanghai Husi has experienced significant financial and customer losses and the authorities' investigations are still ongoing. It is very unlikely that production will be resumed soon," OSI said in the statement.

It added that a small of number of Shanghai Husi staff would be kept on to assist with the ongoing investigation.

"As such, Shanghai Husi cannot be fully shut down at this stage," the firm added.

Yum has fully cut ties with OSI in China, while McDonald's has suspended its ties with the firm pending the outcome of a Chinese investigation. China is Yum's biggest market and McDonald's third largest by outlets.

The incident - just one of a series of food safety issues to hit China over the past year - has underlined the challenge of regulating supply chains in China, where food scandals can have a major impact on a firm's sales and reputation.

OSI said it had stated a redundancy programme for the Shanghai plant on Monday. A total of 340 staff would be made redundant, including 226 directly employed by Shanghai Husi and a further 114 contractors.

"It was our expectation that they could resume their work as soon as possible. Unfortunately, due to circumstances beyond our control, this will not be the case," the firm added.

A series of firms including retailer Wal-Mart Stores Inc , French grocer Carrefour SA and ketchup maker HJ Heinz Co have all been caught in food safety scares in China.

(Reporting by Adam Jourdan; Editing by Stephen Coates)