The World Health Organisation has raised its pandemic alert for swine flu to the second highest level, meaning that it believes a global outbreak of the disease is imminent.

WHO says the phase 5 alert means there is sustained human-to-human spread in at least two countries.

It also signals that there will be an increase in efforts to produce a vaccine.

Margaret Chan, WHO's director-general, made the decision on Wednesday to raise the alert level from phase four - signifying transmission in only one country - after reviewing the latest scientific evidence on the outbreak.

"It is important to take this very seriously," she said.

Cases confirmed

WHO has thus far confirmed human cases of swine flu in Mexico, the US, Canada, Britain, Israel, New Zealand and Spain.

The virus is believed to have claimed up to 159 lives as of Wednesday.

A 23-month-old Mexican child died on Wednesday in the US, becoming the first person outside of Mexico to become a victim of swine flu.

The family of the child had recently travelled from Mexico City, crossing the border into Texas, US officials said.

At least five other people across the US were also taken to hospital after falling ill from the virus.

Barack Obama, the US president, has described the situation as serious and urged US schools with suspected cases to close.

"This is obviously a serious situation, serious enough to take the utmost precautions."

'Extensive steps'

Obama called on local officials to be vigilant in tracking suspected cases and said "more extensive steps" may be required.

He has asked congress for $1.5bn to respond to swine flu, over fears that the virus could further affect the global financial crisis.

Fears of a pandemic have led to flight cancellations, tourism industry losses and bans on pork imports around the world.

Mexico has estimated the outbreak is costing companies at least $57m a day and contributing to a 36 per cent loss in tourism revenue.

The country's finance ministry has established a $450m fund to fight the virus, after health authorities said up to 159 people may have died from the new strain of H1N1 virus.

Al Jazeera's Franc Contreras, reporting from Mexico City, said: "Mexico is supposedly where the virus initiated ... but there are still millions of people going about their daily business trying to keep some semblance of normalcy as they try to get through this.

"People are trying to get along normally, but this is nothing close to normal."

Cuba has banned all flights to its neighbour and Argentina announced on Tuesday a five-day ban on flights arriving from Mexico.

Health ministers from the region are to hold an emergency meeting on Saturday to discuss the threat of a swine flu pandemic.

'Scientific review'

The WHO was set to hold a "scientific review" of the outbreak to collect what was known about how the disease spreads, how it affects human health and how it can be treated.

US doctors are taking increased precautions as fears over the virus mount [AFP]

"It's new, it's causing severe illnesses in Mexico and people should be aware of this.

"At the same time we know that this illness can be treated with drugs that are on the market and that symptoms are mild and they are recovering."

In another development, 10 countries have banned pork imports from some US states, including China - the second biggest buyer of US pork - despite assurances that the contagious disease cannot be transmitted in meat.

Egypt ordered the slaughter of hundreds of thousands of pigs as a precautionary measure on Wednesday, a move the UN called "a mistake". 

Dave Warner, from the US pork producers' council, said: "I think the economics right now is being driven by fear of what could happen, rather than what really is happening."