By Alistair Bell and Noel Randewich

MEXICO CITY (Reuters) - A strain of flu never seen before has killed up to 60 people in Mexico and also appeared in the United States, where eight people were infected but recovered, health officials said on Friday.

Mexico's government said at least 20 people have died of the flu and it may also be responsible for 40 other deaths.

It shut down schools and cancelled major public events in Mexico City to try to prevent more deaths in the sprawling, overcrowded capital. Authorities said they had enough antiviral medicine to treat about 1,000 suspected cases reported so far.

The World Health Organisation said tests showed the virus from 12 of the Mexican patients was the same genetically as a new strain of swine flu, designated H1N1, seen in eight people in California and Texas.

"Our concern has grown as of yesterday," Dr. Richard Besser, acting director of the U.S. Centres for Disease Control and Prevention told reporters in a telephone briefing.

Global health officials were not ready to declare a pandemic -- a global epidemic of a new and deadly disease such as flu. "So far there has not been any change in the pandemic threat level," Besser said.

But the human-to-human spread of the new virus raised fears of a major outbreak. Mexico's government suspended classes for millions of children in Mexico City, where scared residents rushed out to buy face masks and kept their kids at home.

"We're frightened because they say it's not exactly flu, it's another kind of virus and we're not vaccinated," said Angeles Rivera, 34, a government worker who fetched her son from a public kindergarten that was closing.

Close analysis showed the disease is a mixture of swine, human and avian viruses, according to the CDC.

Humans can occasionally catch swine flu from pigs but rarely have they been known to pass it on to other people.

Mexico reported 1,004 suspected cases of the new virus, including four possible cases in Mexicali on the border with California.

Most of the dead were aged between 25 and 45, a health official said. It was a worrying sign as seasonal flu can be more deadly among the very young and the very old but a hallmark of pandemics is that they affect healthy young adults.

Health Minister Jose Angel Cordova said Mexico has enough antiviral drugs to combat the outbreak for the moment. "In the last 20 hours, fewer serious cases of this disease and fewer deaths have been reported," he told reporters.

The WHO said the virus appears to be susceptible to Roche AG's flu drug Tamiflu, also known as oseltamivir, but not to older flu drugs such as amantadine.

NO CONTAINMENT

Canada has not reported any cases of the flu and is not issuing a travel warning for Mexico, but the country's chief public health officer David Butler-Jones said the outbreak was "very concerning" and Canada was paying close attention.

The CDC's Besser said it was probably too late to contain the outbreak. "There are things that we see that suggest that containment is not very likely," he said. Once it has spread beyond a limited geographical area it would be difficult to control.

But there is no reason to avoid Mexico, CDC and the WHO said. "CDC is not recommending any additional recommendations for travellers to California, Texas and Mexico," Besser said.

Worldwide, seasonal flu kills between 250,000 and 500,000 people in an average year, but the flu season for North America should have been winding down.

The U.S. government said it was closely following the new cases. "The White House is taking the situation seriously and monitoring for any new developments. The president has been fully briefed," an administration official said.

In California, where six people have been infected with the flu, Governor Arnold Schwarzenegger said authorities were monitoring patients with flu-like symptoms and communicating with Mexican health officials.

Mexico's government cautioned people not to shake hands or kiss when greeting or to share food, glasses or cutlery. Flu virus can be spread on the hands, and handwashing is one of the most important ways to prevent its spread.

The outbreak jolted residents of the Mexican capital, one of the world's biggest cities with around 20 million residents. One pharmacy ran out of surgical face masks after selling 300 in a day.

The virus is an influenza A virus, carrying the designation H1N1. It contains DNA from avian, swine and human viruses, including elements from European and Asian swine viruses, said the CDC, which is already working on a vaccine.

Scientists were trying to understand why there are so many deaths in Mexico when the infections in the United States seem mild, Besser said.

The CDC said it will issue daily updates here

Surveillance for and scrutiny of influenza has been stepped up since 2003, when H5N1 bird flu reappeared in Asia. Experts fear that or another strain could cause a pandemic that could kill millions.

The last flu pandemic was in 1968 when "Hong Kong" flu killed about a million people globally.

(Additional reporting by Stephanie Nebehay in Geneva, Maggie Fox in Washington and David Ljunggren in Ottawa; Writing by Kieran Murray