Containment of the swine flu virus that has affected people across the world and believed to have killed 149 people in Mexico is no longer feasible, and global health officials should focus on protecting populations from its severest effects, the World Health Organisation said today.

With people taken ill from Scotland to New Zealand, the organisation raised its pandemic alert level to four, from three earlier today. The highest level is six, indicating a global pandemic.

A WHO official said it had confirmed the virus was being passed from human to human but said it had not rapidly spread from infected individuals to their surrounding communities. Nearly all the patients struck ill with the disease had recently travelled to Mexico, and no one outside that country has yet perished from the disease.

WHO assistant director general Dr Keiji Fukuda said the increase in alert level indicated "a significant step towards pandemic influenza," but maintained "we are not there yet".

"We have taken a step in that direction, but a pandemic is not considered inevitable at this time," Fukuda said in Geneva. "The situation is fluid and the situation continues to evolve - and we will monitor that."

The organisation did not recommend border closures or travel restrictions, saying such measures would likely be ineffective in preventing spread of the virus but would cause significant hardship.

Fukuda said the organisation did not recommend shifting global vaccine-development capacity away from the typically milder seasonal flu to the swine flu, noting that the annual flu season is just ramping up in the southern hemisphere. It would take four to six months to develop a swine flu vaccine.

Ahead of the WHO announcement this evening, the EU's health commissioner today urged Europeans to postpone non-essential travel to Mexico and the US, and US officials cautioned against non-essential travel south of their border.

Meanwhile, as the death toll from the swine flu virus in Mexico rose to at least 149 and brought Mexico City, one of the world's largest cities, to a standstill. The first cases were confirmed in the UK this afternoon.

In Luxembourg, where EU foreign ministers were discussing the virus, Androulla Vassiliou told reporters people should avoid travelling to Mexico or the US "unless it is very urgent for them".

"Personally, I'd try to avoid non-essential travel to the areas which are reported to be in the centre of the cluster in order to minimise the personal risk and to reduce the potential risk to spread the infection to other people," Vassiliou said.

Possible cases of swine flu were reported as far afield as Israel and New Zealand after a declaration at the weekend by the WHO of an international public health emergency was followed by a call for worldwide surveillance of the spread of the virus.

The Scottish health minister, Nicola Sturgeon, tonight confirmed the first British cases of swine flu. Two people in Airdrie, who had recently returned from Mexico, have contracted the virus and seven others who had been in contact with them are showing mild symptoms, said Sturgeon.

A Canadian woman visiting Sale in Greater Manchester is in hospital undergoing tests for possible swine flu, it emerged this afternoon, as Britain's chief medical officer, Sir Liam Donaldson, warned that the country would inevitably be hit by cases at some point. It was not known if the woman had been to Mexico recently.

"We are aware that an overseas visitor to the Sale area is being tested for possible swine flu," NHS North West said in a statement. "The person concerned has been taken to hospital for further tests, in keeping with recommendations, and purely as a precaution."

Spain's health ministry today said a young man from Almansa in the Castilla-La Mancha region who had recently been in Mexico had been confirmed as having swine flu, and 17 other people were under investigation.

The health minister, Trinidad Jimenez, said the man was responding well to treatment and was not in a serious condition.

In Washington, President Barack Obama said today the swine flu cases were cause for concern, not alarm. The US has launched border screening for swine flu exposure, with officials to ask people about "fever and illness".

Financial turmoil

Fears of a potential pandemic have spooked financial markets worldwide, with airline and tourism stocks plunging today, the dollar dropping to its lowest level against the yuan, and the Mexican peso losing about 3% in electronic trading last night. Oil prices also fell. In London the FTSE 100 index lost more than 60 points in early trading, falling about 1.5% to 4095.06.

But shares soared in drug companies, including GlaxoSmithKline, and medical glovemakers. Shares of Top Glove, the world's largest listed rubber latex glovemaker, jumped more than 8% to 5.95 ringgit on the Malaysian stock exchange.

Mexico

Mexican health secretary José Ángel Córdova said 149 people are believed dead from swine flu in that country. He said that health officials are investigating 1,995 people who presented at Mexican hospitals with suspected swine flu. Mexican health and education officials closed the nation's schools until 6 May in order to stave off further infections while they formulate preventative measures.

The government is warning citizens not to shake hands or to stand close to each other. Many people stayed at home, or only ventured out wearing masks. Some stored water and food. Others left the city altogether.

"[We are] monitoring, minute by minute, the evolution of this problem across the whole country," said the Mexican president, Felipe Calderón. The World Bank yesterday approved $205m (£141bn) in loans to the country to fight the outbreak.

United States

US health officials have confirmed at least 40 cases in five US states. None of the US cases has been fatal, but Centres for Disease Control and Prevention acting director Richard Besser said Americans should not believe they have been spared.

"I wouldn't rest on the fact that we have only seen cases in this country that are less severe," Besser said. He said many factors could explain the discrepancy, and said that as health officials monitoring the US discover more cases, the range of severity is likely to "broaden".

But he added that the additional cases tallied today, all at a school in New York City whose students had recently visited Mexico, were the result of wider testing and not the spread of the virus.

The US last night declared its own national health emergency. However, White House officials urged people not to panic and pointed out that no case outside Mexico had proved fatal.

The US homeland security secretary, Janet Napolitano, ordered the immediate release of 12m doses of antiviral treatments, such as Tamiflu, collected over five years in response to fears about the spread of avian flu.

The US has begun work on a vaccine, but that is unlikely to be available for months and CDC officials say schools may be closed and large gatherings banned in the worst affected areas.

British action

In Scotland, the health secretary, Nicola Sturgeon, said two people in Lanarkshire had been admitted to hospital on their return from Mexico; however, their flu-like symptoms were mild and the couple's condition was causing little concern, she said. Test results due today should reveal whether they have contracted swine flu.

Another man, Chris Clarke, from Stanwick, Northamptonshire, fell ill on a British Airways flight from Mexico City to Heathrow and was told to stay indoors, but tests came back negative.

Britons arriving back at Gatwick from Cancún said a doctor on board had questioned them about possible flu symptoms before they left the aircraft today.