Swine flu confirmed in Israel and New Zealand

MEXICO CITY (Reuters) - New Zealand and Israel confirmed cases of swine flu on Tuesday, the latest countries hit by a new strain that has killed up to 149 people in Mexico and which threatens to become a pandemic.

The World Health Organisation has raised its alert level to phase 4, indicating a significantly increased risk of pandemic. Global markets tumbled for a second day on Tuesday on fears the outbreak could snuff out fragile signs of economic recovery.

No one has died outside Mexico but more than 50 infected people have been found in the United States, six in Canada and two each across the Atlantic in Spain and Scotland. Possible cases were being tested in South Korea and Australia.

New Zealand said three of 11 people in a school group that visited Mexico had tested positive and it expected the others would also turn out to be positive when tests were completed.

Health Minister Tony Ryall said all those affected appeared to have only mild symptoms and had been responding to treatment.

Authorities have tracked down most of the 356 people on the same flight from Los Angeles as the infected students.

The Israeli carrier, a 26-year-old man, had also recently returned from Mexico.

"His condition is good but he is being kept hospitalised for observation," health ministry spokeswoman Einav Shimron said.

One of the mysteries of the current outbreak is why all cases outside Mexico have so far been relatively mild.

The WHO said the flu was being spread by human-to-human transmission but it did not advise any travel restrictions or border closures.

Asian and European stock markets retreated, with airline stocks taking another hit and drug makers posting gains. The yen climbed to a seven-week high against the euro and a one-month high versus the dollar as investors cut their exposure to riskier currencies.

Oil dropped 2 percent, sinking below $50 a barrel.

TRAVEL ALERTS

Britain, France, Germany and the United States issued travel alerts for Mexico, which relies on tourism as a main source of foreign currency. Japan advised its citizens in Mexico to consider returning home soon.

China promised to disclose any cases promptly. State-run newspapers urged officials to be open and avoid the kind of cover-up that brought panic during the SARS epidemic in 2003.

Asian companies stepped up precautions, restricting travel and advising staff on how to protect themselves.

"We're limiting all non-essential travel to places that have seen cases of swine flu, and staff members returning from those areas will be quarantined for a period of time before being allowed to enter our factories and facilities," said Edmund Ding, spokesman for Taiwanese electronics parts firm Hon Hai, which has several factories in Mexico.

Experts say that while it is impossible to stop the spread of the disease, efforts to slow its progression around the world could buy crucial time for countries to procure essential drugs.

The last flu pandemic, a Hong Kong flu outbreak in 1968, killed about one million people around the world.

MEXICO HUNKERS DOWN

In Mexico, epicentre of the latest outbreak, people from company directors to couriers wore face masks while airlines checked passengers for flu symptoms.

"We will defeat this threat," Mexico City Mayor Marcelo Ebrard said as several hundred people suspected to be suffering from the flu were treated in hospitals and life in the normally hectic capital took on an eerie hush.

Mexico City shut restaurants, bars, cinemas, stadiums and some government offices to stop the infection from spreading.

Unsure how worried they should be, people stocked up on food, drinking water, rental movies and surgical masks. Some opted to work from home. Schools were closed until May 6.

Facing damage to tourism and trade -- motors of an economy that is already tipping into recession from the global downturn -- Mexico said it would not order a mass closure of businesses to try to contain the infection.

"Economic activity must continue," Labour Minister Javier Lozano told a news conference.

Danske Research said worries over the outbreak weighed on global markets but they were not panicking. The swine flu could be used as an excuse to reduce risk after a period of increased appetite, it said.

If the WHO raises its pandemic alert level, it could have a further negative impact.

"The impact would obviously be biggest for countries involved and for emerging markets with weak medical infrastructure and lack of contingency plans for fighting pandemics," Danske said.

Worldwide, seasonal flu kills between 250,000 and 500,000 people in an average year. The new strain is worrying as it spreads rapidly between humans and there is no vaccine for it.

Most of the fatalities have been people aged between 20 and 50, an ominous sign because a hallmark of past pandemics has been the high rate of fatalities among young adults.

Mexican media have speculated the flu may have originated at a pig farm in the southeastern state of Veracruz.

But Health Minister Jose Angel Cordova said the first case that alerted authorities to a possible rogue flu strain was in the southern state of Oaxaca. It was too early to identify the cause or geographical source of the virus.

WHO also did not know where the outbreak started.

The first victims may not have recognised they were infected with a new type of flu requiring different treatment than normal flu, they may not have received the medicines until late, or they may have been infected with other diseases reducing their immunity to the virus, WHO spokesman Gregory Hartl said ina Geneva.

Officials say the virus is not caught from eating pig meat products but several countries banned U.S. pork imports.

The heavy volume of visitors to Mexico only underscores the risk of contagion. Airlines fly more than 1 million passengers in and out of Mexico City's international airport each week.