March 31, 2011 6:30:27 AM
By Chizu Nomiyama and Chisa Fujioka
TOKYO, March 31 (Reuters) - Pressure mounted on Japan on Thursday to expand the evacuation zone around its stricken nuclear power plant while officials said radiation may be flowing continuously into the nearby sea, where contamination was now 4,000 times the legal limit.
In the first data on the impact of the devastating earthquake and tsunami that triggered the nuclear crisis, Japanese manufacturing slumped the most on record in March as factories shut down and global supply chains were broken.
The damage to the world's third-biggest economy from the quake and tsunami alone could cost more than $300 billion, making it the world's costliest natural disaster, and a report from a Wall Street investment bank said nuclear-related compensation claims could reach more than $130 billion.
Both the U.N. nuclear watchdog and Japan's nuclear safety agency said the government should consider widening the 20-km (12-mile) zone after high radiation was detected at twice that distance from the facility.
Opposition politicians have lambasted Prime Minister Naoto Kan for sticking with the original exclusion area, nearly three weeks after the disaster led to the world's worst nuclear crisis since Chernobyl in 1986.
More than 70,000 people have been evacuated from the 20-km ring around the plant. Another 136,000 who live in a 10-km (6-mile) band beyond that have been encouraged to leave or to stay indoors.
The International Atomic Energy Agency (IAEA) said radiation at Iitate village, 40 km (25 miles) from the Fukushima Daiichi nuclear plant, exceeded a criterion for evacuation.
"We have advised (Japan) to carefully assess the situation and they have indicated that it is already under assessment," Denis Flory, a deputy director general of the IAEA, said.
Japan's chief Cabinet Secretary Yukio Edano, however, gave no indication the government was poised to widen the zone.
"At the moment, we have no reason to think that the radiation will have an effect on people's health," Edano told a news briefing when asked about the IAEA's findings at Iitate village.
The consistently high levels of radiation found in the sea near the complex could mean radiation is leaking out continuously, Japan's nuclear watchdog said.
"That is a possibility," Nuclear and Industrial Safety Agency Deputy Director-General Hidehiko Nishiyama told a news conference, adding engineers had not found the source of the leaks.
Radioactive iodine in seawater near drains running from the plant was 4,385 times more than the legal limit, the highest recorded so far during the crisis.
FRENCH PRESIDENT HEADS TO TOKYO
In a much-needed diplomatic boost for Japan, French President Nicolas Sarkozy will visit Tokyo on Thursday and hold talks with Kan.
Sarkozy will be the first world leader to travel to Japan since the earthquake and tsunami on March 11, which left more than 27,500 people dead or missing.
France, the world's most nuclear-dependent country, has flown in experts from state-owned nuclear reactor maker Areva
Concern over radiation beyond Japan grew again after Singapore detected radiation nine times the limit in cabbages from Japan, while the United States reported "minuscule" levels of radiation in milk samples on its west coast.
"These types of findings are to be expected in the coming days and are far below levels of public health concern, including for infants and children," the Food and Drug Administration and the Environmental Protection Agency said.
Contaminated milk was one of the biggest causes of thyroid cancers after the nuclear accident in Chernobyl because people near the plant kept drinking milk from local cows.
Several countries have banned milk and produce from the areas near the damaged nuclear plant, 240 km (150 miles) north of Tokyo. Japan has itself stopped exports of vegetables and milk from near the plant. [ID:nL3E7EN0JP]
While food makes up only 1 percent of Japan's exports, the nuclear emergency poses a risk to an economy burdened with public debt twice the size of its $5 trillion dollar economy and a fast ageing population.
Japan has called on World Trade Organisation nations not to impose "unjustifiable" import curbs on its goods.
JAPANESE MANUFACTURING ACTIVITY SLUMPS
The government has said the cost of damage from the earthquake and tsunami could top $300 billion. The 1995 Kobe quake cost $100 billion while Hurricane Katrina in 2005 caused $81 billion in damage.
Japanese manufacturing activity slumped to a two-year low in March and posted the sharpest monthly fall on record as the quake and tsunami hit supply chains and output. [ID:nLHE7EO00C]
"It is a major issue now how the nuclear crisis develops, and stock market players are also closely watching it," said Akeshi Minami, chief economist at Norinchukin Research Institute, Tokyo.
TEPCO could face compensation claims of up to 11 trillion yen ($133 billion) -- nearly four times its equity -- if Japan's worst nuclear crisis drags on for two years, an analyst at Bank of America Merrill Lynch wrote in a report.
A Reuters investigation showed Japan and TEPCO repeatedly played down dangers at its nuclear plants and ignored warnings, including a 2007 tsunami study from the utility's senior safety engineer. [ID:nL3E7EU0HO]
As operators struggle to regain control of the damaged reactors, nuclear experts said the continued lack of a permanent cooling system was hindering efforts to cool down fuel rods.
Workers have been forced to pump in seawater to cool the rods, but this creates contaminated seawater around the stricken plant and is making it difficult to reconnect the plant's internal cooling system which contains radiation.
"There's definitely a conflict now between trying to keep the reactors cool and managing the contaminated waste water being generated by the operation," said Ed Lyman, a senior scientist with the Union of Concerned Scientists, a U.S.-based nuclear watchdog group.
Radiation readings around the evacuation zone vary widely. Daily readings published by the government show that 30 km northwest of the reactors levels are climbing up to 42 microsieverts per hour, about 6 times the cosmic radiation experienced during a Tokyo-New York flight, while elsewhere at that distance around the reactor it is just 1.0-1.2 microsieverts per hour.
A Reuters reading in downtown Tokyo on Thursday showed a radiation level of 0.18 microsieverts per hour. This is still quite low by global standards as Japan has lower levels of natural background radiation than other places.
The World Nuclear Association says average background radiation in most areas globally varies from 0.17 to 0.39 microsieverts per hour. So even with higher-than-usual levels, Tokyo is at the bottom of that range. (Additional reporting by Yoko Nishikawa in Tokyo, Sylvia Westall and Fredrik Dahl in Vienna; Andrew Callus in Geneva; Writing by Michael Perry; Editing by John Chalmers and Dean Yates)
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