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HAMBURG, Oct 10 (Reuters) - German authorities said on Friday that the lethal strain of bird flu has been confirmed on a farm in the east of the country.

Germany's eastern state government of Saxony said the H5N1 bird flu strain had been confirmed in a duck at a poultry farm near Dresden.

"Tests have confirmed that this involves the highly contagious version of the H5N1 virus epidemic," said Ralph Schreiber, spokesman for Saxony's social welfare ministry.

The flu strain was detected during a routine examination at the farm, which held some 1,400 birds. All birds at the farm have been slaughtered as a precaution, the state said.

A 3-km (2-mile) radius quarantine zone has been established around the farm and a 10-km radius observation zone also was established in which all poultry must be locked up in buildings.

Bird flu was last detected in farm birds in Germany in December 2007.

A spokeswoman for Germany's federal Agriculture Ministry stressed state authorities were responsible for combating bird flu. Officials were currently assessing the risk level.

Relevant international organisations including the European Union plus neighbouring countries had been informed of the case, she said.

The virus has infected 387 people worldwide in 15 countries, killing 245 of them, according to the World Health Organization's Aug. 10 tally. Indonesia has the highest toll of any nation.

Although bird flu remains an animal disease, experts fear that the virus might mutate into a form easily passed from human to human.

(Reporting by Michael Hogan; Editing by Michael Roddy)

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