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

Although the flu is not caught from eating pig meat products 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 of the illness on travel.

The World Health Organization looked set to raise its pandemic alert level, indicating it believes that large outbreaks are possible.

There were 40 confirmed cases of the flu in the United States, including 20 new cases at a New York City school where eight cases were already identified, U.S. health officials said.

Texas health authorities confirmed a third case of swine flu at a school near the Mexican border and California had eight confirmed cases.

Secretary of State Hillary Clinton urged caution in traveling to Mexico and the European Union also advised its 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 was 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 Cordova ordered classes canceled cross Mexico until May 6.

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 1 percent, and U.S. stocks slipped on concerns that a possible global flu outbreak could dampen signs of optimism about the recession-hit world economy.

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 15 percent, while Continental Airlines Inc lost 14 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.


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.

But Russia, China, Ukraine, Kazakhstan, Philippines, Thailand and the UAE have banned U.S. pork imports, U.S. officials said. They complained the bans had no scientific basis and could cause serious disruptions in trade.

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 the cases in the United States and six in Canada, was not serious. Spain had 26 suspected cases under observation, health officials said.

A New Zealand teacher and a dozen students who recently traveled to Mexico were also 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.

Suspected cases were also reported in France, Norway, Germany, Sweden 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 Organization has opened its 24-hour war room command center.

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 and cut world GDP by 5 percent.

Mexico's peso fell more than 4 percent on Monday and its stock market fell more than 3 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, theaters, bars and clubs, but most people went to work on Monday, buses and subway trains packed with commuters wearing surgical face masks.

Mexico was further unsettled by a 5.6-magnitude earthquake that rocked buildings in the capital on Monday, although there were no 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. A centuries-old statue of Jesus Christ believed to protect against disease was carried through the streets of Mexico City for the first time in more than a century.

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