Page last updated at 21:18 GMT, Monday, 27 April 2009 22:18 UK

Swine flu fears hit travel shares

People wearing masks as they visit a Mexican hospital
The flu outbreak is causing global alarm

Shares in airlines and travel firms have fallen sharply around the world on concerns about the economic impact of the swine flu outbreak.

With the outbreak in Mexico spreading to the US, Canada, Spain and the UK, shares in British Airways fell 7.7%, while cruise firm Carnival lost 6.8%.

Investors fear the flu outbreak may lead to people cancelling overseas trips, or even to travel restrictions.

But some shares did rise, such as Roche, maker of a key anti-flu drug.

'Real concern'

Analysts said investors were more cautious than panicked, but still concerned that if the outbreak worsened, especially in the US, it could potentially derail economic recovery efforts.

Swine flu is ripping through the markets, creating uncertainty in its wake
Manoj Ladwa, ETX Capital

"In essence, this is an already dangerous time for financial markets, so to have this spectre developing right now is just cause for some very real concern," said analyst James Hughes of CMC Markets.

In other developments:

• Shares in most UK-listed travel firms were lower, with hotel business Intercontinental down 4.2%, and tour operator Thomas Cook falling 4.4%

• ABTA, the UK's main travel association, said there were "no suggestions" there had been any outbreaks of the flu in Mexico's main tourist regions, and that normal booking conditions still applied - though tourists have been warned against travel to areas with swine flu by the European Union's Health Commissioner

SWINE FLU
Swine flu is a respiratory disease thought to spread through coughing and sneezing
Symptoms mimic those of normal flu - but in Mexico more than 100 people have died
Good hygiene like using a tissue and washing hands thoroughly can help reduce transmission

• Airlines around the world have seen their shares fall, with Hong Kong's Cathay Pacific ending down 8%, Australia's Qantas losing 4%, Germany's Lufthansa losing 9%, Air France finishing down 7%, and Continental Airlines falling 16% in the US

• German tour operator TUI says tours it was running in Mexico would miss out the capital as a precaution

• Shares in Swiss firm Roche - the manufacturer of anti-flu drug Tamiflu - rose 3.5% after it said it was increasing production. Shares in UK rival GlaxoSmithKline, which makes anti-flu drug Relenza, also gained, adding 5.7%

• Russia, China, Ukraine and Thailand ban imports of pork from North and Latin America, despite the swine flu in question not infecting pigs

• US soy and corn prices fall on fears that the flu outbreak will cause a slump in demand for pork products, which would hit sales of animal feed

• Oil prices fall on concerns that the flu outbreak will knock the world economy. US light crude was down $1.87 a barrel to $49.68

• The Mexican peso falls 5% against the US dollar, dropping as low as 13.97 per dollar.

'Health emergency'

The declines in airline and travel stocks initially dragged down most stock markets. However, European markets recovered later on, boosted by drugmakers, whose shares were up on hopes of demand for more vaccines.

AIRLINES' SHARES
British Airways planes
British Airways -8%
Air France -7%
Lufthansa -9%
Cathay Pacific -8%
Qantas -4%
Continental Airlines -16%

"The threat of the pandemic will add further weakness to global trade," said Justin Urquhart Stewart, investment director at Seven Investment Management.

"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."

The UK's main FTSE 100 index closed up 0.27% to 4,167, while Germany's Dax gained 0.4% to close at 4,694.

However, US markets finished lower, with Wall Street's main Dow Jones index falling 0.64% to 8,025, while the S&P 500 lost 1%, closing at 857.5.

Hong Kong's Hang Seng share index had earlier ended down 2.7%. Japan's Nikkei index managed to end up 0.2% after takeover news in the semiconductor sector.

"Swine flu is ripping through the markets, creating uncertainty in its wake," said trader Manoj Ladwa of ETX Capital in London.

The World Health Organization has declared the flu a "public health emergency of international concern", warning that it could spark a pandemic, or global outbreak.



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