Global Stocks Lower on Swine Flu Worries

By Pan Pylas

LONDON -- World stock markets fell Tuesday as investors worried that any swine flu pandemic could derail a global economic recovery as the World Health Organization said it was now too late to contain the virus and urged countries to do what they can to mitigate the effects.

In London, the FTSE 100 of leading British shares was down 1.9%, while Germany's DAX fell 2.6%. The CAC-40 in France was down 2.6%.

The disease, which broke out in Mexico just days ago, has spread to Europe and testing of suspected cases was underway around the world. Governments everywhere have toughened their precautions and the World Health Organization raised its alert level from three to four, which is just two steps short of it declaring a full pandemic.

Though all 150 suspected deaths and most of the 2,000 or infections have been seen in Mexico, investors around the world have decided to run for cover, abandoning riskier assets such as stocks and diving back into safe haven assets like the dollar and the yen.

"Equity markets have continued to sell off amid worries that the spread of the virus will undermine hopes of an economic recovery later this year," said Stuart Bennett, an analyst at Calyon Credit Agricole.

"Until further details are available with regard to the spread of the virus and its threat, concerns will remain at the forefront signaling that risk aversion will remain elevated," he added.

With all the uncertainty gripping the markets, Wall Street futures were pointing to a sharply lower opening Tuesday.