China's newest strain of avian flu, which has killed at least six people, has sent stock markets downhill. Local stocks were first to suffer, with shockwaves heading across Asia and into Europe. The news mainly hurt tourism and travel-related shares.

Shares in Chinese airlines declined to their lowest in nearly four years following the news of six deaths from the H7N9 bird flu virus.

The deaths are more than a third of the 14 confirmed human infection cases in China. Most of the affected were on the eastern coast near Shanghai. Mass slaughter of poultry has been ordered in the region and all live poultry markets are closed.

Earlier in the week Shanghai issued a level 3 flu alert, the second lowest stage of four.

The number of flu victims has been low, it's believed, due to the fact the H7N9 virus cannot be transmitted from human to human. The WHO says no such cases have been registered so far.

Guangzhou-based China Southern Airlines Co. which deploys around 78 per cent of its capacity on the domestic market, was down 10.6 per cent on Friday, the stock's biggest one-day decline since April 27, 2009.

European airlines are also down over the flu fears. Air France-KLM, Lufthansa, IAG and Ryanair fell by between 3.3 and 4.7 per cent.

"The sector is reacting to fears of a new pandemic of bird flu in China, which would hurt air traffic," a Paris-based airline sector analyst told Reuters. "For now, investors are pricing in a bad scenario, although if you look back four years ago, Chinese authorities did a good job dealing with the pandemic back then, and the airline sector didn't suffer much."

Hong Kong stocks are also down 2.7 per cent over flu outbreak fears.

“People are worried the new bird flu would develop into a disaster like SARS ['Severe acute respiratory syndrome', which killed thousands in 2003],” Davin Wu, a transportation analyst at Credit Suisse Group AG, told Bloomberg. “At least leisure travelers will be cutting back their trips to China.” 

Analysts say the situation will only improve as the Chinese flu danger is over.

• A Permanent Economic Emergency