UPDATE 3-Flu pandemic may be unfolding, WHO says

* WHO says may be seeing pandemic unfold before our eyes

* Reports clusters of H1N1 cases in Japan, Spain, Britain

* Threats from new flu strain to dominate five-day congress

* Affected countries call for rethink of WHO pandemic alerts

* 193 countries to negotiate deal on drugs and vaccines

(Recasts with comments on pandemic scale, tuberculosis)

By Laura MacInnis

GENEVA, May 18 (Reuters) - Humanity may be witnessing an influenza pandemic unfold, the head of the World Health Organisation said on Monday, as Japan reported a big jump in infections with the newly-discovered H1N1 virus.

Flu fears dominated the start of the WHO's annual congress in Geneva, where many of the 40 countries touched by the flu strain urged the United Nations agency to rethink its pandemic alert scale that is now at the second-highest notch.