MEXICO CITY (AFP) - Mexico City, at the heart of the H1N1 swine flu epidemic, is breathing easier--in large part because the masks are starting to come off.

With federal authorities cautiously optimistic they have the virus in hand, large parts of the population have decided the mouth-and-nose covers are unnecessary.

"We're not wearing them anymore. They itch," explained Rossana EllerBracker, a 36-year-old events coordinator sipping a takeaway coffee.

Her sister, accompanying her on a window-shopping walk through a mostly shuttered shopping center in a normally teeming part of the capital, agreed.

"I think what we're seeing is just a flu--a little stronger than normal, but that's all," said Veronica EllerBracker, a 46-year-old set designer.

Veronica was speaking from the viewpoint of someone who had come closer than most to the flu: her 21-year-old daughter, she said, had contracted the H1N1 virus but recovered in three days after a course of antiviral medicine.

"I was never afraid for her. We have medicine, it's easily cured," she said.

Rossana added that she believed now much of the alarm over the flu was "psychological terror" stirred up by President Felipe Calderon's government facing mid-term elections, and by the media.

But while there were fewer masks in evidence in upmarket and bohemian areas of Mexico City on the weekend, a lingering wariness over the disease remained.

Street conversations were held at a distance. The Mexican habit of touching the other person while talking was repressed. Any passerby sneezing or coughing--even from dust or other innocuous reasons--was given wide berth.

And in the center of Mexico City, around the Zocalo, a touristy area filled with cheap clothes shops, street vendors and fast food joints, masks were still worn by around half the crowd.

Clubs and cinemas were all closed, and cafes and restaurants were serving takeaway meals only, under orders from city officials.

A red open-top tourist bus that made a circuit of the city had only a handful of occupants.

One of them, Peter Andrewartha, a 57-year-old Australian retired teacher in the middle of a three-week Mexican vacation with his wife, said he was "not really concerned" about the flu itself.

"My real concern is getting through LA airport on the way back home," he told AFP.

Gerry McDonald, a 43-year-old university lecturer from Ireland, was similarly calm.

"We have 10 days' worth of Tamiflu (a brand of antiviral drug effective against H1N1)" bought in Dublin before he left with his girlfriend, he said.

He explained he was in Mexico for only three days, and so was leaving his travel plans unchanged--but would have cut his Mexico stay short because all entertainment venues and tourist sites were closed.

Mexicans reliant on the tourist trade complained--in a friendly, non-bitter way--that the flu had eviscerated their businesses.

But they expected a bounce back in visitor numbers once the crisis was finally seen to be over.

"Right now, all of them (foreign tourists) are afraid," said a taxi driver, Nicolas Campos Cruz. "But they'll be back, maybe in six months, maybe 11 months, maybe a year."

In one of the many empty youth hostels near Zocalo, a young woman behind the counter, Mariana Puja, 23, said she had had 80 percent cancelations.

"But many tourists on the phone said 'I am still coming, just later, maybe in July, maybe in August'," she said. (By MARC BURLEIGH/AFP)