While the swine flu virus has so far killed no one outside Mexico, the fact that it has proved able to spread quickly between humans has raised fears that the world may finally be facing the flu pandemic that scientists say is long overdue.

Shares and oil prices fell in Asia and Europe, as investors feared a further shock to an already fragile global economy, if trade flows are curbed and manufacturing is hit. The MSCI world equity index fell 0.7 per cent, and US index futures suggested a fall of more than 1 per cent on Wall Street.

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 20 cases identified in the United States and six in Canada, was not serious. A New Zealand teacher and around a dozen students who recently returned from Mexico were also being treated as likely mild swine flu cases.

Cases of the flu, which has components of classic avian, human and swine flu viruses but has not actually been seen in pigs, were also suspected in Britain, France, Italy and Israel.

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 European Union's health chief urged citizens to avoid non-essential travel to areas affected by swine flu, and the European Commission called an urgent meeting of health ministers. The United States declared a public health emergency on Sunday. Although most cases outside Mexico were relatively mild, a top official at the Centers for Disease Control and Prevention said she feared there might be US fatalities.

The WHO has declared the flu a 'public health emergency of international concern' that could become a pandemic, or global outbreak of a serious disease. Its emergency committee was due to decide on Monday whether to raise its pandemic alert level, currently at 3 on a scale of 1 to 6.

In the financial markets, travel and leisure stocks such as Hong Kong's Cathay Pacific Airways and British Airways nevertheless fell sharply, whereas makers of drugs and vaccines, such as Roche, were higher.

An outbreak of the SARS respiratory virus in 2003 was largely limited to Southeast Asia and cost the region's economy around 0.6 per cent of GDP. The World Bank estimated last year that a global flu pandemic could cost US$3 trillion (S$4.5 trillion) and cut world GDP by 5 per cent. -- REUTERS