ABU DHABI, July 14 (Reuters) - Egypt's Agriculture Ministry said on Thursday it had rejected a U.S. wheat shipment as it contained a higher-than-allowed level of ergot fungus.

The ministry said in a statement the shipment had an ergot content of 0.096 percent, well above the 0.05 percent permitted by a decree passed last week on import specifications.

Egyptian quarantine authorities' refusal to permit wheat shipments with even trace amounts of ergot - which can lead to hallucinations in large quantities but is considered harmless at minor levels - wreaked havoc in the market over the past six months.

But a ministerial decree that came into effect on Tuesday put an end to the confusion by allowing for the more commonly accepted international standard of 0.05 percent.

The U.S. wheat was tested for a second time in July after an initial rejection in June and was found to contain an unacceptable level, the ministry said on Thursday.

But documents belonging to the Health Ministry and seen earlier by Reuters show the cargo had initially tested for only 0.006 percent ergot.

The U.S. cargo belongs to trading firm Venus and was initially rejected on June 12. (Reporting by Maha El Dahan; Editing by Jason Neely and Dale Hudson)