Hong Kong's Hang Seng fell 3.4 percent, its biggest weekly drop since March. Cathay Pacific Airways Ltd, Asia's sixth- biggest carrier, paced declines among travel-related stocks, dropping 5.3 percent.
At least eight people in Asia have died after catching bird flu, the World Health Organization said.
"In the short term, it's a concern," said Norman Ho, who helps manage US$2 billion at Value Partners Ltd in Hong Kong. An outbreak "may destroy economic value."
In Thailand, the SET Index slid 7.4 percent this week. For the month, it slumped 9.5 percent, the first drop since February 2003. Thai Airways International Pcl, the nation's biggest airline, plunged 11 percent, its biggest one-week slide since June 2002.
Before the spread of the bird flu, Thailand was the world's fourth-largest exporter of chicken meat. Those exports accounted for less than 1 percent of the Thai economy.
The central bank said this week the outbreak may reduce economic growth this year by 0.2 percentage point. It expects the economy to expand 7.3 percent this year.
"People are scared and they are looking at what happened last year" with SARS, said Alex Muromcew, who helps manage US$600 million at Loomis Sayles & Co in San Francisco. "If it's anything like last year, you don't want to own airlines or anything toward travel."
China, the origin of the SARS epidemic that killed 774 people worldwide last year, became the 10th nation to report an outbreak of bird flu this week. The Shanghai Composite Index fell 0.6 percent this week after a one and a half week holiday for the Lunar New Year.
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