(Reuters) - Two more people have contracted bird flu in Shanghai, China's health ministry said on Saturday, as authorities closed live poultry markets and culled birds to combat a new virus strain that has killed six people.

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State-run Xinhua news agency said authorities planned to slaughter birds at two live poultry markets in Shanghai and another in Hangzhou after new samples of the H7N9 virus were detected in birds at the three sites.

More than 20,000 birds have been culled at another Shanghai market where traces of the virus were found this week.

Officials in Shanghai, China's financial hub, closed all the city's live poultry markets on Saturday, emptying food stalls.

All poultry trading was banned in Nanjing, another eastern Chinese city, although local officials said they had not found any trace of the bird flu virus and declared that chicken on the retail market was safe to eat, official media reported.

The new strain of bird flu has infected 18 people in China, all in the east. Six people have died in an outbreak that has spread concern overseas.

The World Health Organisation (WHO) said that 10 infected people were severe cases and two were mild cases. It reiterated there was no evidence of ongoing human-to-human transmission of the virus.

"More than 530 close contacts of the confirmed cases are being closely monitored. In Jiangsu, investigation is ongoing into a contact of an earlier confirmed case who developed symptoms of illness," the Geneva-based WHO said in a statement on Saturday.

There were no signs of panic in Shanghai, where four of the six people died, and people generally said they were not worried. But the culling, which has been widely publicised, did underline for some how close to home the issue had become.

"Now it's just downstairs," said Liu Leting, a user of Weibo, China's version of Twitter which has more than 500 million users.

"Suddenly I discover that I'm living in an epidemic zone!"

In one city restaurant, a waitress said they planned to stop serving chicken because of the outbreak.

"After we sell out the chicken in stock, we will not buy new chicken and will stop serving chicken dishes for the time being," said the waitress, who declined to be identified.

While the strain does not appear to be transmitted from human to human, authorities in mainland China and Hong Kong said they were taking extra precautions.

Hong Kong's government said it was intensifying surveillance of travellers and poultry coming into the city.

China's Food and Drug Administration said it had fast-tracked approval for intravenous anti-influenza drug Peramivir, developed by the U.S.-listed biotechnology firm BioCryst Pharmaceuticals Inc.

Peramivir is in medical trials to prove its effectiveness against type-A and type-B influenza, the administration said in a statement. The H7N9 strain belongs to the type-A group.

Shanghai authorities have stressed the H7N9 virus remained sensitive to the drug Tamiflu and those who were diagnosed early could be cured. Tamiflu is made by Roche Holding AG.

China and Hong Kong were badly hit by a 2002-2003 epidemic of Severe Acute Respiratory Syndrome that started in China and killed about one-tenth of the 8,000 people infected worldwide.