By Alistair Bell
MEXICO CITY (Reuters) - A new virus has killed up to 149 people in Mexico and world health experts moved closer on Monday to declaring it the first flu pandemic in 40 years as more people were infected in the United States and Europe.
The World Health Organisation raised its pandemic alert for the swine flu virus to phase 4, indicating a significantly increased risk of a pandemic, a global outbreak of a serious disease.
The last such outbreak, a "Hong Kong" flu pandemic in 1968, killed about one million people.
Although deaths have only occurred in Mexico, more than 40 people in five states were sickened with the flu in the United States, including 20 at a New York City school.
The streets of Mexico City were a sea of blue surgical face masks as most residents preferred to cover up against infection than stay home from work. Cafes, bars, gyms and even law courts were closed, however, and the city was eerily quiet.
Fearful Christians paraded a centuries-old statue of Jesus, believed to protect against disease, through the city centre for the first time in more than a century.
Mayor Marcelo Ebrard stopped short of closing the packed subway system, saying: "We have to exhaust every avenue before we resort to a complete economic paralysis of the city."
The swine flu is not caught from eating pig meat products, but several countries imposed import bans on pork from the United States. Stocks in companies such as airlines were also hit as investors worried about the impact on travel.
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.
Texas confirmed six cases of the flu and California has 11 people infected. Canada has six cases, all of them mild.
The United States, Britain, France and Germany all urged their citizens to avoid non-essential travel to Mexico and other areas affected by swine flu.
Mexico relies on tourism as its No. 3 source of foreign currency and millions of Americans travel there every year.
Mexican Health Minister Jose Angel Cordova said the outbreak was now suspected of having killed 149 people and warned the number of cases would keep rising.
Most of the those who died were between 20 and 50 years of age, an ominous sign because a hallmark of past pandemics has been the high rate of fatalities among healthy young adults.
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.
Airlines fly more than a million passenger seats in and out of Mexico's international airport every week. Airlines checked passengers for flu symptoms, and many wore masks on board.
NEW BLOW TO ECONOMY
Cinemas were shut in the Mexican capital, and a Mexico City premiere of the "X-Men Origins: Wolverine" superhero movie, where brawny Australian actor Hugh Jackman was due to walk the red carpet later this week, was scrapped.
Some 33 million schoolchildren will stay home as Mexico cancels classes until May 6 to contain the outbreak.
World oil prices fell more than 2 percent to close to $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 0.8 percent and U.S. stocks also slipped.
Analysts said the flu crisis could shave more than half a percentage point off Mexico's already recession-bound economy this year from the dent to retail and tourism.
Flu fears hit U.S. airline stocks hard as investors worried that the travel industry would suffer. Shares prices for UAL Corp, the parent of United Airlines, shed 14 percent, while Continental Airlines Inc lost 16 percent.
Other travel and leisure stocks such as Hong Kong's Cathay Pacific Airways and British Airways fell sharply, whereas makers of drugs and vaccines, such as Roche, were higher.
A string of countries including Australia, France, Germany, Norway, Sweden, Israel, Guatemala, Costa Rica and South Korea were testing suspected cases of the Mexican flu.
Spain had 26 suspected cases under observation, and a New Zealand teacher and a dozen students who recently travelled to Mexico were being treated as likely mild 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 near Glasgow.
(Additional reporting by Jonathan Lynn and Stephanie Nebehay in Geneva, Maggie Fox, Emily Kaiser and Lesley Wroughton in Washington, Helen Popper and Miguel Gutierrez in Mexico City)
