Quake ravaged Japan battles against nuclear meltdown

 FUKUSHIMA, Japan (Reuters) – Japanese engineers raced to prevent a meltdown at a stricken nuclear plant on Tuesday, as rescuers scrambled to help millions left without food, water or heating by a devastating earthquake and tsunami.

A second explosion rocked the Fukushima nuclear complex on Monday and rapidly failing water levels exposed fuel rods in another reactor, but the United Nations' nuclear watchdog said the crisis was unlikely to turn into another Chernobyl.

Rescue workers combed the tsunami-battered region north of Tokyo, where officials say at least 10,000 people were killed in the 8.9-magnitude earthquake and tsunami that followed it.

"It's a scene from hell, absolutely nightmarish," said Patrick Fuller of the International Red Cross Federation from the northeastern coastal town of Otsuchi.

Prime Minister Naoto Kan has dubbed the multiple disasters Japan's worst crisis since World War Two and, with the financial costs estimated at up to $180 billion, analysts said it could tip the world's third biggest economy back into recession.

Japanese stocks closed down more than 7.5 percent, wiping $287 billion off market capitalization in the biggest fall since the height of the global financial crisis in 2008. Insurers' shares fell for a second day in London and New York.

The big fear at the Fukushima complex, 240 km (150 miles) north of Tokyo, is of a major radiation leak. The complex has seen explosions at two of its reactors Saturday and Monday, which sent a huge plume of smoke billowing above the plant.

The worst nuclear accident since the Chernobyl disaster in Ukraine in 1986 has drawn criticism that authorities were ill-prepared and revived debate in many countries about the safety of atomic power.

Switzerland put on hold some approvals for nuclear power plants and Germany said it was scrapping a plan to extend the life of its nuclear power stations. The White House said U.S. President Barack Obama remained committed to nuclear energy.

"NOT CHERNOBYL"

Yukiya Amano, head of the International Atomic Energy Agency, said the reactor vessels of nuclear power plants affected by the disaster remained intact and, so far, the amount of radiation that had been released was limited.

"The Japanese authorities are working as hard as they can, under extremely difficult circumstances, to stabilize the nuclear power plants and ensure safety," Amano said in a statement, adding at a news conference later that it was "unlikely that the accident would develop" like Chernobyl.

An explosion at the Soviet Chernobyl plant sent radioactive fallout in swathe across northern Europe.

The plant operator, Tokyo Electric Power Co (TEPCO), said fuel rods at the No. 2 reactor were fully exposed. This could lead to the rods melting down.

The rods, normally surrounded by cooling water, were partially exposed earlier after the engine-powered pump pouring in this water ran out of fuel. TEPCO said it was preparing to pump more cooling water on the rods.

There were earlier partial meltdowns of the fuel rods at both the No. 1 and the No. 3 reactors, where the explosions had occurred. A TEPCO official said the situation in the No. 2 reactor was even worse than in the other units.

A meltdown raises the risk of damage to the reactor vessel and a possible radioactive leak.

"If cooling water is not returned, the core should melt in a matter of hours," said Edwin Lyman, senior scientist for global security programs at the Union of Concerned Scientists which lobbies for stronger security and safety measures at nuclear plants.

Crucially, officials said the thick walls around the radioactive cores of the damaged reactors appeared to be intact after the earlier hydrogen blast.

But the government warned those still in the 20-km (13-mile) evacuation zone to stay indoors. TEPCO said 11 people had been injured in the blast.

"This is nothing like a Chernobyl," said Murray Jennex, a nuclear expert at San Diego State University. "At Chernobyl you had no containment structure -- when it blew, it blew everything straight out into the atmosphere."

Nonetheless, U.S. warships and planes helping with relief efforts moved away from the coast temporarily because of low-level radiation. The U.S. Seventh Fleet described the move as precautionary.

South Korea, Hong Kong, Singapore and the Philippines said they would test Japanese food imports for radiation.

France's ASN nuclear safety authority said the accident could be classified as a level 5 or 6 on the international scale of 1 to 7, putting it on a par with the 1979 U.S. Three Mile Island meltdown, higher than the Japanese authorities' rating.

Japan's nuclear safety agency has rated the incidents in the No.1 and No.3 reactors as a 4, but has not yet rated the No. 2 reactor.

TOWNS FLATTENED

Around 850,000 households in the north were still without electricity in near-freezing weather, Tohuku Electric Power Co. said, and the government said at least 1.5 million households lack running water. Tens of thousands of people were missing.

"The situation here is just beyond belief, almost everything has been flattened," said the Red Cross's Fuller in Otsuchi, a town all but obliterated. "The government is saying that 9,500 people, more than half of the population, could have died and I do fear the worst."

Kyodo news agency reported that 2,000 bodies had been found Monday in two coastal towns alone.

Whole villages and towns have been wiped off the map by Friday's wall of water, triggering an international humanitarian effort of epic proportions.

"When the tsunami struck, I was trying to evacuate people. I looked back, and then it was like the computer graphics scene I've seen from the movie Armageddon. I thought it was a dream . it was really like the end of the world," said Tsutomu Sato, 46, in Rikuzantakata, a town on the northeast coast.

In Tokyo, commuter trains shut down and trucks were unable to make deliveries as supermarket shelves ran empty.

Estimates of the economic impact are only now starting to emerge.

Hiromichi Shirakawa, chief economist for Japan at Credit Suisse, said in a note to clients that the economic loss will likely be around 14-15 trillion yen ($171-183 billion) just to the region hit by the quake and tsunami.

Even that would put it above the commonly accepted cost of the 1995 Kobe quake which killed 6,000 people.

The earthquake has forced many firms to suspend production and shares in some of Japan's biggest companies tumbled on Monday, with Toyota Corp dropping almost 8 percent. Shares in Australian-listed uranium miners also dived.

Global companies from semiconductor makers to shipbuilders faced disruptions to operations after the quake and tsunami destroyed vital infrastructure, damaged ports and knocked out factories supplying everything from high-tech components to steel.

The Bank of Japan offered a combined 15 trillion yen ($183 billion) to the banking system earlier in the day to soothe market jitters.

The earthquake was the fifth most powerful to hit the world in the past century. It surpassed the Great Kanto quake of September 1, 1923, which had a magnitude of 7.9 and killed more than 140,000 people in the Tokyo area.