Mexico flu reaches Europe as U.S. warns travellers

MEXICO CITY (Reuters) - Mexico said a new flu virus has killed up to 149 people and it ordered all schools to close across the country on Monday as the disease spread in the United States, Canada and Europe, raising fears of a pandemic.

The flu virus spreads quickly between humans and although it has so far only killed people in Mexico, governments across the world took measures to try to reduce its impact.

The World Health Organisation said its emergency committee could decide to raise its pandemic alert level, currently at 3 on a scale of 1 to 6, to phase 4 or 5. The move would show the WHO believes that large outbreaks are possible.

U.S. health officials said they now had 40 confirmed cases of the flu, including 20 new at a New York City school.

U.S. Secretary of State Hillary Clinton called for caution over travel to Mexico and the European Union also urged citizens to avoid non-essential travel to areas affected by swine flu.

Mexico relies heavily on tourism, its third biggest source of foreign currency, and millions of Americans travel to Mexico every year.

Mexican Health Minister Jose Angel Cordova said the outbreak is now suspected to have killed 149 people and the number of cases would continue to rise. Schools in the sprawling capital had already been closed but he ordered classes cancelled cross Mexico until May 6.

Oil prices fell more than 4 percent to below $50 a barrel as investors feared a new blow to an already fragile global economy if trade flows are curbed and manufacturing is hit.

The MSCI world equity index fell 1 percent, and U.S. stocks were down in choppy trading.

The virus is widely being called swine flu although it has components of classic avian, human and swine flu viruses and has not actually been seen in pigs.

Spain became the first country in Europe to confirm a case of swine flu when a man who returned from a trip to Mexico last week was found to have the virus.

But his condition, like that of 40 cases in the United States and six in Canada, was not serious. A New Zealand teacher and around a dozen students who recently returned from Mexico were also being treated as likely mild swine flu cases.

In the first confirmed cases in Britain, Scotland's health minister said two people tested positive for swine flu and were being treated under isolation in a hospital near Glasgow.

Suspected cases were also reported in France, Italy and Israel.

U.S. President Barack Obama said officials were closely monitoring cases of swine flu but he also tried to ease fears.

"This is obviously a cause for concern and requires a heightened state of alert. But it is not a cause for alarm," Obama told a meeting of the National Academy of Sciences.

Many countries have stepped up surveillance at airports and ports, using thermal cameras and sensors to identify people with fever, and the World Health Organisation has opened its 24-hour "war room" command centre.

HEALTH EMERGENCY

Although most cases outside Mexico were relatively mild, a top official at the Centers for Disease Control and Prevention said she feared there might be U.S. fatalities.

In financial markets, travel and leisure stocks such as Hong Kong's Cathay Pacific Airways and British Airways nevertheless fell sharply, whereas makers of drugs and vaccines, such as Roche, were higher.

"The threat of the pandemic will add further weakness to global trade," said Justin Urquhart Stewart, investment director at Seven Investment Management in London. "We saw with SARS tangible percentage points knocked off the index, and that was in a buoyant time. Put that in a weaker time and it is likely to be more unpleasant."

An outbreak of the SARS respiratory virus in 2003 was largely limited to Southeast Asia and cost the region's economy around 0.6 percent of GDP.

The World Bank said last year that a global flu pandemic could cost $3 trillion (2.1 trillion pounds) and cut world GDP by 5 percent.

Mexico's peso fell more than 3 percent on Monday and its stock market fell 4.1 percent on concerns that the virus fears would send the economy further into recession.

In Mexico City, authorities have already shut schools, churches, stadiums, cinemas, theatres, bars and clubs, but most people went to work on Monday, buses and subway trains packed with commuters wearing surgical face masks.

Mexico is already struggling with a vicious drug war and an economic recession, and the mood was darkened further on Monday when the capital was rocked by a 6.0-magnitude earthquake, although there were no immediate reports of deaths or damage.

Many in Mexico City spent the weekend hunkered at home or wore blue surgical masks handed out by truckloads of soldiers to venture out onto strangely hushed streets. The city government considered halting public transport.

Health authorities across Asia tried to give reassurance, saying they had enough stockpiles of anti-flu drugs to handle an outbreak.

Guan Yi, a virology professor at the University of Hong Kong who helped to fight SARS and bird flu, said a pandemic looked inevitable. "I think the spread of this virus in humans cannot possibly be contained within a short time ... We are counting down to a pandemic."

(Additional reporting by Stephanie Nebehay in Geneva, Maggie Fox, Emily Kaiser and Lesley Wroughton in Washington, Helen Popper, Miguel Gutierrez and Alistair Bell in Mexico City and Tan Ee Lyn in Hong Kong; Writing by Kevin Liffey; Editing by Kieran Murray)