Shares of McDonald's slumped 5 percent and were the top loser in the Dow Jones Industrial Average <.DJI>. Shares of Tyson fell 4 percent.

Analysts said the news could have a ripple effect that could affect demand for beef in other markets.

"Canada, relative to Europe, is not as important to McDonald's. It's a real small piece of the biz," said John Glass, an analyst that follows McDonald's at CIBC World Markets. "But this is a serious issue, because you're not dealing in facts, you're dealing in perception."

A Canadian official told Reuters that one cow in Alberta had tested positive for the disease. It was the first confirmed case of the brain wasting disease, also known as bovine spongiform encephalopathy, in a cow raised in Canada.

There previously had been one case in Canada in an imported cow. The United States has never reported a case of the disease.

The human variant of the brain wasting disease, which has been linked to eating tainted beef, has killed more than 100 people in Britain and Europe.

The United States on Tuesday said it had temporarily banned Canada beef imports.

McDonald's has seen its sales hurt in the past as concerns over mad cow disease hit first the European market and then Japan. No McDonald's hamburgers were ever linked to tainted beef.

But though Canada is a smaller market for McDonald's, talk of mad cow could cause a ripple effect both for McDonald's and Tyson, analysts said.

"That is the real risk for someone like Tyson, if demand for beef falls by 25 percent overnight like it did in Japan and Britain," Todd Duvick, food industry analyst with Bank of America, said.

McDonald's shares were down 3.4 percent, or 61 cents, at $17.55 in New York Stock Exchange trade after trimming losses. Tyson shares fell 5.5 percent, or 52 cents, at $8.95. Meat processing competitor Smithfield Foods Inc. (nyse: SFD - news - people) was down 2 percent, or 40 cents, at $19.43 and hamburger chain Wendy's International Inc. (nyse: SFD - news - people) fell almost 3 percent to $29.70.

Shares of SureBeam Corp. (nasdaq: SURE - news - people), which uses electron beam technology to kill bacteria in foods, rose more than 10 percent to 3.25 on the Nasdaq.