| MEXICO CITY
MEXICO CITY A new swine flu virus that has killed 149 people in Mexico was found further around the world on Tuesday and the spectre of a pandemic began to hit air travel.
The United States said it now had 65 cases of swine flu, Canada announced two more infections and new cases were also confirmed in Israel and New Zealand.
The United States, Canada and the European Union advised people to avoid non-essential travel to Mexico, and Cuba suspended all flights to and from Mexico for 48 hours. Private companies also adopted their own travel restrictions to countries where cases have been confirmed.
The World Health Organisation said a pandemic -- a global outbreak of a serious new illness -- is not yet inevitable but that all countries should prepare for the worst, especially poorer developing nations.
"They really get hit disproportionally hard," said WHO acting assistant director-general Dr. Keiji Fukuda.
One of the mysteries of the outbreak is why the virus has killed scores of people in Mexico but all of the cases outside the country have been relatively mild.
Experts say this may be simply a matter of where they have been looking to find it and officials say they expect to find deaths as the disease spreads.
A pandemic could snuff out fragile signs of economic recovery around the world as travel, trade and manufacturing output would all be hit.
The last flu pandemic was in 1968, when "Hong Kong" flu killed about 1 million people around the world.
Spain and Britain also have confirmed cases of the new swine flu, and many other countries have suspected infections.
Mexico City is at the centre of the outbreak and many residents are staying in their homes while schools, churches, cinemas and restaurants have all been shut down.
Airline share prices continued to fall on Tuesday on fears that they could see a sharp drop in traffic.
European and Asian stock markets retreated, but better-than-expected U.S. consumer confidence data provided a bit of relief, drug makers posted gains and U.S. shares were little changed.
Oil dropped to below $50 a barrel and investors cut their exposure to riskier currencies.
The virus is not caught from eating pig meat products but several countries, led by Russia and China, banned U.S. pork imports. The EU said it has no plans to restrict pig meat products from the United States.
"Markets are doing what they tend to do, taking fright," said Howard Wheeldon, strategist at BGC Partners in London. "But in my view, it's totally unnecessary."
Britain, France, Germany, Canada 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.
U.K. travel firms Thomson Holidays and First Choice said they decided to repatriate their customers from Mexico and to cancel flights bound for Cancun on Tuesday. British Airways said it would continue to operate its services.
Private companies stepped up precautions, restricting travel to Mexico and some other countries with confirmed cases and advising staff on how to protect themselves.
Honda, which like most major auto makers has production facilities in Mexico, has suspended all global business travel until at least May 6.
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.
Experts say that while it is impossible to stop the spread of the new disease, efforts to slow its progress could buy crucial time for countries to procure essential drugs.
The WHO's Fukuda said a mild pandemic is possible but he also cautioned that the 1918 "Spanish" flu that killed tens of millions of people emerged from mild beginnings.
Worldwide, seasonal flu kills between 250,000 and 500,000 people in an average year.
In Mexico, 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 has shut all schools across the country until at least May 6 and in the capital, restaurants, bars, cinemas, stadiums have been ordered closed to limit new infections.
Streets lined with trendy terrace cafes and restaurants in an upscale neighbourhood were silent as city officials ordered eateries to close or only serve take-away customers.
"It's just weird. And tips are where we make our money so with nobody coming in it's terrible," said waitress Pamela Espana, 28, behind a counter of untouched salads and pastries.
Unsure how worried they should be, people stocked up on food, drinking water, rental movies and surgical masks. Some opted to work from home.
Facing damage to tourism and trade -- motors of an economy that is already in recession from the global downturn -- Mexico said it would not order a mass closure of businesses.
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.
(Additional reporting Maggie Fox in Washington; Jonathan Lynn and Laura Macinnis in Geneva; Helen Popper, Robin Emmott and Mica Rosenberg in Mexico City; Jeff Franks in Havana; Tan Ee Lyn in Hong Kong; and Lincoln Feast in Singapore; Writing by Kieran Murray; Editing by Anthony Boadle)