Pandemic fears wipe billions off travel shares

In London, shares in British Airways fell by almost 9%. Thomas Cook, cruise company Carnival and Thomson Holidays owner TUI all fell more than 5%. InterContinental Hotels dropped almost 5%.

Far Eastern markets fell sharply as traders recalled the 2003 outbreak of severe acute respiratory syndrome, Sars, which struck down the region and had a massive impact on its economies as western companies imposed travel bans and millions of people refused to travel to affected regions.

Stock markets around the world spent most of the day sharply down before a calmer start on Wall Street settled nerves, but the Mexican bourse was tonight trading down 5% while the peso slumped 4% amid concerns about the impact on the country's economy.

The Spanish market also fell sharply after it confirmed the first case of swine flu in Europe. This evening, the FTSE 100 was trading broadly flat, having at one stage tumbled nearly 100 points.

RBS researchers Greg Gibbs and Andy Chaytor said: "General risk aversion was apparent in Asian trading today, with memories of Sars relatively fresh. There are more questions than answers at this stage (e.g. how infectious, how deadly). But uncertainty itself will damage confidence."

Asian markets fell, with Hong Kong down 3%, and Shanghai and Singapore off 2%. Leading Asian firms including electronics giants Sony, Panasonic and Samsung have already told employees they should not travel to Mexico City, where more than 100 people are reported to have died from swine flu.

EU health commissioner Androulla Vassiliou today advised people to avoid travelling to areas directly affected. UK companies were understood to be holding contingency meetings on whether to tell employees to avoid travelling to swine flu-hit countries.

British Airways shares fell 14.8p to 149.1p. The flag-carrier operates flights to Mexico, but analysts are more worried its routes to North America will be hit hard if there is a further decline in corporate travel. EasyJet and Ryanair shares were down 5% and 4%.

Thomas Cook shares fell 15¼p at 267½p, TUI was off 71/4p at 2641/2p and Carnival was 151p lower at 1788p. Analysts pointed out that seven out of 10 cruises out of the US spend at least one night in Mexican beach resort Cancun.

Deutsche Bank analysts also sounded a note of caution on exhibition companies like IBM, Reed Elsevier and Informa. During Sars, exhibitors and delegates both pulled out of events.

Traders advised selling all tourism-related stocks and shares in food makers and shipping companies.