WASHINGTON (Reuters) - New experimental compounds may be able to help the body fight off hepatitis C -- an incurable virus that infects millions around the world and causes liver failure and cancer, researchers said on Thursday.

The research, done by separate teams in Canada and the United States, also led to new discoveries about how hepatitis infects the body -- and how the body fights off infection.

Hepatitis C, identified only in 1989, is spread mainly through blood transfusions and the reuse of needles -- including those used for drugs and tattoos.

It infects an estimated 175 million people around the world, many of whom do not know they are infected. About 8,000 die every year from hepatitis C in the United States alone.

Viruses such as influenza are eventually cleared by the immune system. But hepatitis C can stay in the body forever, eluding the various weapons of the immune system.

The U.S. Centers for Disease Control and Prevention says 75 percent to 85 percent of those infected have chronic hepatitis C infection. Many will develop liver damage, sometimes leading to cirrhosis and liver cancer.

An antiviral drug called ribavirin, used along with an immune system booster called alpha interferon, can help some patients control hepatitis C infection, but does not cure it.

"Just a year ago, the hepatitis C virus field had no leads," said Michael Gale, a virologist at the University of Texas Southwestern Medical Center in Dallas who led one of the studies. "We were totally clueless."

Gale's team and a team led by John Hiscott at McGill University in Montreal, Canada, found out how the virus de-activates a cell's defenses, so that it can stay in the cell virtually forever.

VIRUS BLOCKS A CELL'S DEFENSES

Writing in the journal Science, both teams said they found the virus can block a cell's production of interferon regulatory factor 3, or IRF3 -- produced by cells to defend against infection and call in more immune system help. The McGill team found it also blocks a second compound called IRF-7.

"This really gives us the first evidence of how it is the virus can cause lifetime infection, as opposed to influenza which infects you for a week," Gale said in a telephone interview.

Gale's team also discovered that individual cells have their own immune responses, a finding his team has published in the April issue of the Journal of Virology.

"The whole thing works by IRF3 turning on genes in the human cell that fight off infection. We are going to find out what those genes are, what their products are," Gale said.

This in turn could lead to new ways to battle a number of different viruses, from the AIDS virus to herpes.

In the meantime, two drug companies -- Schering-Plough and privately owned German company Boehringer Ingelheim -- have developed compounds they hope will work against hepatitis C.

Gale's team tested the Schering product, called by its experimental name SCH-6, and found it could protect the cell's defenses.

"We found that the new protease inhibitors could actually prevent the virus from blocking this immune response and basically restore the innate antiviral response in human cells," Gale said.

The work reported in Science was all done in the laboratory, and Gale said the drugs will be difficult to test because no animals are naturally infected with hepatitis C the way humans are.

But Boehringer has reported on Phase I clinical trials -- early research designed to test the safety of a drug in people -- that suggest its protease inhibitor is safe and may at least greatly reduce levels of the virus in the body.