Mexico breathed easier on Monday in its fight against a deadly flu epidemic that may be retreating after a 10-day scare that has brought much of public life to a standstill.

But new cases of the H1N1 virus, which mixes swine, avian and human flu strains, still appeared across the world, keeping alive fears of a possible pandemic.

The Mexican health ministry announced on Sunday the flu 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.

"The virus has entered into a stabilization phase. The cases are starting to decrease," Mexican President Felipe Calderon said, referring to the illness in his country.

He said Mexico would begin to get back on its feet again this week after shutting restaurants, offices, cinemas and even churches 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," Calderon said in a televised interview late on Sunday.

After days of alarm that had kept streets eerily quiet, Mexico City appeared more relaxed on Sunday, 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 as residents feared infection.

Laboratory tests have shown 590 firm cases of the virus so far in Mexico, out of which 22 people were confirmed to have died.

The World Health Organization said its laboratories had identified a total of 898 H1N1 flu infections in 18 countries. Its toll lags national reports but is considered more scientifically secure.

In the United States, the flu has spread to 30 states and infected 226 people, the US 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 people's health. "We're not out of the woods," Besser told "Fox News Sunday."    

The US 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 50 Mexican business people and tourists after some showed flu symptoms.

China denied Mexican complaints that discrimination lay behind the measures.

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. - Reuters