* Airline stocks fall 15 percent in U.S. on flu scare
* Hotels and cruise ship operators also lower * Health fears 'could stall' airlines recovery By Tim Hepher and Karen Jacobs
PARIS/ATLANTA, April 27 (Reuters) - Panicked sellers fled investments in air, land and sea on Monday as fears of a flu pandemic rekindled memories of the Asian SARS crisis that caused widespread industry turmoil six years ago.
From Sydney to New York, selling hit the world's leading airline brands, hotels and cruise operators and the cost of insuring airline debt rose following the outbreak of swine flu.
The United States declared a public health emergency and Americans and Europeans were urged to avoid non-essential travel to Mexico, where 103 people have died from the outbreak.
Investors wiped $5 billion off the value of leading U.S. airlines in just 10 minutes of trading, with all of the carriers most heavily exposed to Mexico racking up double-digit losses.
Continental Airlines, which offers more seats than any foreign airline into and out of Mexico, according to data provided exclusively to Reuters by airline schedules consultancy Innovata, saw its stock fall by 15 percent.
American Airlines parent AMR Corp and US Airways, the second and third foreign airlines in terms of passenger capacity to the same country, suffered similar falls.
In Europe, major network carriers Air France-KLM and British Airways fell almost 10 percent and Spain's Iberia, which offers the most capacity to Spanish-speaking Mexico from Europe, gave up 7 percent.
Airlines have lurched from crisis to crisis in the past year as carriers grappled with high oil prices, then the credit crunch, a slump in business travel and plunging cargo trade.
Some executives have been tentatively predicting relief from months of weak traffic figures and eying benefits from cost cuts including more than 25,000 job cuts in the United States.
But Helane Becker, a transportation analyst with Jesup & Lamont in New York, said the flu scare could stall any recovery.
"In the summer of 2002, international airline traffic was down 14-15 percent so we would expect something similar, and we would expect any recovery to be pushed from the third quarter of '09 into the fourth quarter of '09 and 2010," Becker said.
LESSONS FROM SARS
The SARS epidemic broke out in early 2003, postponing a recovery from recession worsened by the Sept 11, 2001, attacks. However its economic impact was mostly confined to one quarter.
In Hong Kong, Cathay Pacific Airways -- which at one point considered grounding its fleet during the SARS crisis -- lost 8 percent and Air China fell 13.5 percent.
Singapore Airines said it had taken steps to ensure lessons learned from SARS were used to try to contain the scare. It said cabin crew would try to spot unwell passengers.
"We have standard operating procedures in place based on the experience gained from handling the SARS outbreak. Staff have been briefed on the nature of the disease and are on the alert for customers who appear unwell," a Singapore spokeswoman said.
"As the situation for now is primarily precautionary, there are no plans to disinfect our aircraft or for our cabin crew to wear masks. However, we do carry emergency packs."
American Airlines reassured travellers it was prepared to deal with any type of illness on board a flight and that it had full ground-to-air communication with its medical staff.
It said it would allow passengers to any city in Mexico to change their plans without any fee or penalty, but there were no immediate reports of any airlines cancelling flights.
In Madrid, passengers arriving from Mexico were given information packs on what to do if they fell unwell.
Shares of U.S. hotels and cruise companies joined the rout.
Royal Caribbean Cruises Ltd sank 14 percent in New York, while Carnival Corp was off 9 percent.
U.S. giant Starwood Hotels & Resorts lost nearly 8 percent and Marriott International fell about 5 percent.
Carnival said there were no reports of guests showing symptoms of swine flu on its ships.
Not all analysts were rattled by the swine flu outbreak.
Howard Wheeldon, senior strategist at BGC Partners in London, said airlines were used to living through boom and bust.
"The one thing about airlines is they recover from events like this amazingly quickly. It is damaging and unhelpful, but not the end of the world for them," he said. FACTBOX-Airline exposure to Mexico TAKE A LOOK-Swine flu outbreak (Additional reporting by Ben Harding, Claire Milhench, Jane Baird and Kevin Lim; Editing by David Cowell)