Offices and businesses stayed closed in Mexico on Monday to try to prevent the spread of a deadly new strain of flu, and authorities said a sharp drop in new cases showed the battle was being won.

Outside Mexico, however, the number of confirmed cases continues to rise, and officials say it will take time to confirm just how contagious and dangerous the virus is.

Mexico’s health ministry announced on Sunday the epidemic had passed the worst and experts said the virus might be no more severe than normal flu, although it could still have an impact on world health and was expected to spread to more countries.

“The virus has entered into a stabilization phase. The cases are starting to decrease,” President Felipe Calderon said, adding that Mexico would begin to get back on its feet again this week after shutting restaurants, offices, cinemas and even churches for days to try to stop the spread of the disease.

“Our objective is to return to normality as soon as possible but what I want is to do that in secure conditions,” he said in a televised interview late on Sunday.

After days of alarm that had kept streets eerily quiet, Mexico City appeared more relaxed, with some people venturing out on bikes or running. Many no longer wore the surgical masks that have been almost obligatory in the city in the last week.

Laboratory tests have shown 590 firm cases of the virus in Mexico, out of which 25 people were confirmed to have died.

The World Health Organization (WHO) said on Monday its laboratories had identified 985 H1N1 flu infections in 20 countries. Its toll lags national reports but is considered more scientifically secure.

In Turkey, a hospital denied a media report that one of its patients had been killed by the new strain.

Only one death has been confirmed outside Mexico - a Mexican toddler who was visiting the United States.

FLU SPREADS IN UNITED STATES

In the United States, the flu has spread to 30 states and infected 226 people, the U.S. Centers for Disease Control and Prevention said. It seems to be hitting mostly younger people, with very few cases among those over 50 years old.

CDC acting director Richard Besser said there were “encouraging signs” the new strain was not more severe than what would be seen during normal seasonal flu, but he still expected the new virus to have a significant impact on health.

“We’re not out of the woods,” Besser told “Fox News Sunday.

The U.S. government said it hoped to have a vaccine ready for the new flu strain by the autumn.

The WHO said flu surveillance should be increased in humans and animals now that the latest H1N1 strain was found to have infected pigs in Canada. A traveler carried the virus from Mexico to Canada and infected his family and a herd of swine.

Few countries are ready to take chances with the new virus, widely dubbed swine flu.

Action by Chinese authorities to hold Mexicans in hotels and other places, whether they were ill or not, sparked a diplomatic dispute with Mexico. A Mexican Embassy official in China said Chinese authorities were quarantining more than 70 Mexican business people and tourists after some showed flu symptoms.

China denied Mexican complaints that discrimination lay behind the measures.

“The measures concerned are not directed at Mexican citizens and there is no discrimination,” Foreign Ministry spokesman Ma Zhaoxu said in a statement issued on the ministry website (http://www.mfa.gov.cn).

The row over confinement has strained what has been a warming relationship between the two countries, but with Beijing courting Latin America as a trade and diplomatic partner, the damage appears unlikely to last.

Mexico is China’s second biggest trade partner in Latin America - behind Brazil - and its biggest export market there, according to Chinese statistics.

Asia’s trade and tourism could be hit by the latest flu outbreak but lessons learned from the SARS epidemic in 2003 are boosting efforts to counter the effects. SARS, or severe acute respiratory syndrome, killed more than 800 people around the world in 2003 after first appearing in southern China.

By Alistair Bell
MEXICO CITY (Reuters)