Mexico begins shutting down as flu fears spread

MEXICO CITY (Reuters) - Mexico began shutting down parts of its economy on Thursday to slow the spread of a new flu strain as officials urged increased worldwide precautions against an imminent pandemic.

The World Health Organisation (WHO) said it would remain for now at its current alert level -- one notch below full pandemic -- and it would no longer refer to the H1N1 virus as "swine flu" in a nod to beleaguered meat producers.

New confirmed flu cases were reported in the United States and in Europe, although a case in Peru, which would have been the first confirmed case in Latin America outside of Mexico, was later discounted.

U.S. officials said new infections were occurring, although worldwide only a handful of people outside Mexico have required hospital treatment. At least 298 U.S. schools were closed because of possible flu infections.

In Mexico, the worst hit country with up to 176 deaths, President Felipe Calderon told government offices and private businesses not crucial to the economy to stop work beginning on Friday to avoid further spreading a virus that is striking across age and class lines.

"There is no safer place than your own home to avoid being infected with the flu virus," Calderon said in his first televised address since the outbreak started.

In Mexico City, where the virus has already brought public life to a standstill, some were sceptical while others vowed not to take part in the shutdown.

"Closing businesses is not right and not fair. What are we going to live on? Air?" said Andres Garcia, who works in a tailor shop in the old colonial centre of the capital.

Mexico's assembly for export factories, known as maquiladoras, said it would defy the shutdown call while some of the country's mines also vowed to stay in operation.

With its tourism industry savaged, shoppers staying home and exports to the U.S. in steep decline, Mexico could find itself in the longest, deepest recession it has seen in years, according to analysts.

Global markets were taking the flu news in their stride, and Wall Street opened stronger on hopes that the U.S. recession is easing, although it later slid as auto giant Chrysler filed for bankruptcy.

The International Monetary Fund's chief economist Olivier Blanchard said fallout could be "quite dramatic" in some countries, particularly in the tourism sector. But he said it was too early to predict the full impact on a global economy already deep in recession.

"The information that we have at this stage is it is a relatively minor (economic) event," Blanchard said.

Previous studies at the World Bank have said a severe flu pandemic which triggers a clampdown on trade could cost the global economy trillions of dollars.

UNANSWERED QUESTIONS

The WHO and flu experts say they do not yet know enough about this new strain to say how deadly it actually is, how far it might spread and how long any potential pandemic may last.

Flu epidemics generally last a few weeks or months in any single community, and can pass around the world in one or two waves over 18 months to two years before fading out.

U.S. officials have reported 109 confirmed swine flu infections in 11 states and the only death recorded outside of Mexico -- a Mexican toddler visiting Texas.

U.S. Health and Human Services Secretary Kathleen Sebelius told a public webcast there were still many unanswered questions. "We know what happens year in, year out with seasonal flu. What we don't know is if this is going to be more virulent or milder," she said.

U.S. Transportation Secretary Ray LaHood said there were no reasons to cancel flights to Mexico.

U.S. Vice President Joe Biden was forced to row back after he said on television he would tell his family to stay off planes and subways to avoid the virus.

"He said something on TV differently than what he meant to say," White House spokesman Robert Gibbs said, adding that the government guidance on simple, common-sense precautions such as hand-washing stood.

Worldwide, 11 countries have reported confirmed cases of the H1N1 strain, with the Netherlands the latest to join the list. It said a three year-old who had recently returned from Mexico had contracted the virus.

Switzerland also confirmed its first case on Thursday in a man returning from Mexico. Peru's health minister Oscar Ugarte told Reuters that further tests on a suspected case there had determined it was not the new flu strain.

Around the world flu preparations were intensified after the World Health Organisation raised its alert level to phase 5, the last step before a pandemic.

The WHO recommended all countries track any suspect cases and ensure medical workers dealing with them wear protective masks and gloves. But it stopped short of recommending travel restrictions, border closures or any limitation on the movement of people, goods or services.

Keiji Fukuda, acting WHO assistant director-general, told reporters there was no new evidence to prompt the agency to move to its top alert level which would signal a global pandemic was under way.

Fukuda said Swiss drugmaker Roche was stepping up production of Tamiflu to deal with the infection at that the WHO had released some of its own stockpiles of the drug -- known generically as oseltamivir and proven effective against the new strain -- to developing countries deemed most at need, including Mexico.

Several countries have banned pork imports, though the WHO says swine flu is not spread by eating pork.

Egypt started confiscating and slaughtering pig herds despite criticism from the United Nations. The WHO announced on Thursday it was dropping the "swine flu" designation in favour of 'influenza A (H1N1)'.

Chicago live hog futures and pork bellies fell about 3 percent on Thursday, and stayed down even after the WHO announcement, which brokers said was too late.

In Mexico City, a metropolis of 20 million, all schools, restaurants, nightclubs and public events have been shut down to try to stop the disease from spreading, bringing normal life to a halt.

The United States, Canada and many other countries have advised against non-essential travel to Mexico. Many tourists were hurrying to leave, crowding airports.

(Reporting by Maggie Fox, Steve Holland and Lesley Wroughton in Washington, Julie Steenhuysen in Chicago; Jason Lange, Catherine Bremer, Alistair Bell and Helen Popper in Mexico City; Laura MacInnis and Stephanie Nebehay in Geneva, Robin Emmot in Brownsville, Cynthia Johnson in Cairo, Phil Stewart in Rome and Yoko Nishikawa in Tokyo; writing by Andrew Quinn; editing by Anthony Boadle)