Japan's first trade deficit since 1980 raises debt doubts (Reuters)

TOKYO (Reuters) – Japan first annual trade deficit in more than 30 years calls into question how much longer the country can rely on exports to help finance a huge public debt without having to turn to fickle foreign investors.

The aftermath of the March earthquake raised fuel import costs while slowing global growth and the yen's strength hit exports, data released on Wednesday showed, swinging the 2011 trade balance into deficit.

Few analysts expect Japan to immediately run a deficit in the current account, which includes trade and returns on the country's huge portfolio of investments abroad. A steady inflow of profits and capital gains from overseas still outweighs the trade deficit.

But the trade figures underscore a broader trend of Japan's declining global competitive edge and a rapidly ageing population, compounding the immediate problem of increased reliance on fuel imports due to the loss of nuclear power.

Only four of the country's 54 nuclear power reactors are running due to public safety fears following the March disaster.

"What it means is that the time when Japan runs out of savings -- 'Sayonara net creditor country' -- that point is coming closer," said Jesper Koll, head of equities research at JPMorgan in Japan.

"It means Japan becomes dependent on global savings to fund its deficit and either the currency weakens or interest rates rise."

That prospect could give added impetus to Prime Minister Yoshihiko Noda's push to double Japan's 5 percent sales tax in two stages by October 2015 to fund the bulging social security costs of a fast-ageing society.

The biggest opposition party, although agreeing with the need for a higher levy, is threatening to block legislation in parliament's upper house in hopes of forcing a general election.

Japan logged a trade deficit of 2.49 trillion yen ($32 billion) for 2011, Ministry of Finance data showed, the first annual deficit since 1980, after the economy was hit by the shock of rising oil prices.

Were Japan to run a current account deficit, it would spell trouble because it would mean the country cannot finance its huge public debt -- already twice the size of its $5 trillion economy -- without overseas funds.

Japanese investors currently hold about 95 percent of Japan's government bonds, which lends some stability to an otherwise unsustainable debt burden.

Domestic buyers are less likely to dump debt at the first whiff of economic trouble, unlike foreign investors, as Europe's debt crisis has shown.

The trade data helped send the yen to a one-month low against the dollar and the euro on Wednesday.

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Graphic on 2011 trade data http://link.reuters.com/mev26s

Dec trade balance http://link.reuters.com/vyq65s

Exports by destination http://link.reuters.com/far65s

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"HOLLOWING OUT," AGEING POPULATION

Total exports shrank 2.7 percent last year while imports surged 12.0 percent, reflecting reduced earnings from goods and services and higher spending on crude and fuel oil. Annual imports of liquefied natural gas hit a record high.

In a sign of the continuing pain from slowing global growth, exports fell 8.0 percent in December from a year earlier, roughly matching a median market forecast for a 7.9 percent drop, due partly to weak shipments of electronics parts.

Imports rose 8.1 percent in December from a year earlier, in line with a 8.0 percent annual gain expected, bringing the trade balance to a deficit of 205.1 billion yen, against 139.7 billion yen expected. It marked the third straight month of deficits.

Japan managed to sustain annual trade surpluses through the Asian financial crisis of the late 1990s and the post-Lehman Brothers global recession that started in late 2008, which makes the 2011 dip into deficit all the more dramatic.

A generation ago, Japan was the world's export juggernaut, churning out a stream of innovative products from the likes of Sony and Toyota.

Much like China today, Japan's bulging trade surplus became a source of friction with the United States and other advanced economies, who pressed Tokyo to allow the yen to rise more rapidly in order to reduce the imbalance.

A 1985 agreement between Japan, the United States and Europe's big economies -- known as the Plaza Accord after the New York hotel where it was signed -- pushed the yen higher against the U.S. dollar.

Many economists argue that sowed the seeds of Japan's current debt woes. After the Plaza Accord, Japan's economy weakened and its central bank slashed interest rates, which contributed to a credit boom that eventually spawned a financial crisis and led to two decades of economic stagnation.

Bank of Japan Governor Masaaki Shirakawa said on Tuesday he did not expect trade deficits to become a pattern, and did not foresee the country's current account balance tipping into the red in the near future.

But Japan's days of logging huge trade surpluses may be over as it relies more on fuel imports and manufacturers move production offshore to cope with rising costs and a strong yen, a trend that may weaken the Japanese currency longer term.

A fast-ageing population also means a growing number of elderly Japanese will be running down their savings.

Chief Cabinet Secretary Osamu Fujimura said the government wants to closely watch the trend of exports and imports.

"There are worries that the yen's strength is driving Japanese industry to go abroad," said Fujimura. "We have to create new industries ... implement comprehensive steps to boost growth. It is important to secure employment within the nation."

($1=77.71 yen)

(Additional writing by Leika Kihara; Editing by Linda Sieg and Emily Kaiser)

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Japan's post-tsunami revival plan reaches tipping point (Reuters)

TOKYO (Reuters) – Nine months after a historic magnitude 9.0 earthquake unleashed a deadly tsunami that wreaked havoc across Japan's northeast, the nation, armed with $155 billion in funding, is entering a critical stage of the rebuilding effort.

Damaged railways and major roads are mostly fixed with at least temporary repairs, two-thirds of ruined ports have been restored and 47,000 households moved from emergency shelters to temporary housing.

Of 22 million tonnes of rubble, two-thirds have been cleaned up, but final disposal remains a dangerous challenge because of concerns about radiation that spewed from the crippled Fukushima nuclear plant.

All the recovery efforts were made possible by initial emergency budgets totaling 6 trillion yen ($77.19 billion).

Now Tokyo and local officials must produce a plan to "build better" to give the region, long beset by a shrinking and ageing population and lack of investment, a chance of revival.

The tsunami-hit area accounts for about 6-7 percent of Japan's economic output, but the stakes are high for the entire nation. Policymakers, investors and companies are counting on the rebuilding effort to give the $5 trillion economy a jolt needed to keep it from sliding back into recession under the weight of a global slowdown and fears of contagion from Europe's debt crisis.

People and businesses, pessimistic about the region's future however, are packing up. More than 38,000 residents left the area between March and August, the biggest exodus since 1969. Of those that remain, 180,000 out of the region's 5.7 million residents have filed jobless claims between March and October, 70 percent more than a year earlier.

"The people who evacuated the area after the disaster won't feel compelled to return unless they can find stable jobs, so reconstruction without job creation would be a failure," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

"That money will finally flow in is a good news, but it is not a guarantee of a self-sustaining recovery of quake-hit areas."

So far the news is not encouraging. Plans to modernize the struggling fishing industry or move coastal communities to higher ground, a precondition for large-scale rebuilding and investment, have been slow to materialize.

Overwhelmed local bureaucracies, opposition from fishing cooperatives and the need to win the hearts and minds of skeptical residents are getting in the way.

"Unless we can have accords with local people, we cannot proceed with rebuilding projects because there is a possibility of opposition," says a regional official in Miyagi, one of the three prefectures worst hit by the March 11 disaster.

That means it may take months before rebuilding funds start flowing to projects on the ground, local officials say.

OLD BUSINESSES, OLD PEOPLE

The national government is promising five-year tax holidays and light-touch regulation on fishing rights, land use and other issues to those who will invest in special industrial zones in disaster-hit areas. Foreign businesses are also eligible.

Industrial parks focused on automotive parts or medical equipment production as well as renewable energy projects such as wind farms are among ideas proposed by Tokyo.

The process of deciding what to build and where has only just started and only 10 out of 19 municipalities requiring rebuilding in Miyagi prefecture have reconstruction plans ready. In neighboring Iwate, eight out of 12 have such plans.

Reconstruction experts say a shortage of qualified planning professionals is one of the obstacles.

"The fact that many of quake-hit cities and towns are scarcely populated has made it difficult for local officials to create rebuilding plans on their own," said Yoshiyuki Aoki, a senior official of the government's reconstruction office in Tokyo.

He says that, whereas the 1995 Kobe quake hit residential areas constantly under redevelopment, much of the northeast has no recent history of re-zoning and city planning and lacks experts. Tokyo wants to rectify that by sending a team of specialists to help, Aoki says.

Re-establishing the fishing industry is another tough question facing planners.

Cooperatives are defending a system that only loosely ties fishermen with processing firms and retailers, but keeps rivals out and Miyagi governor's initiative to open the business to outsiders got drowned in protests.

Shigeru Tabeta, professor of ocean technology and environment at the University of Tokyo who is assisting with rebuilding of port towns, says preserving the status quo is self-defeating.

Tax breaks and incentives will only work if Japan opens its protected farming and fisheries to foreigners, experts say.

With no magic bullet in sight, spending more on a solid safety net may be the only way to keep communities intact until revitalization plans materialize, says Iwao Sato, sociology of law professor at the University of Tokyo.

His survey of the fishing town of Kamaishi showed more than a third of residents were out of work, compared with a fifth before the quake while the population of self-employed has fallen to 17 percent from 28 percent.

"The government has mostly focused on building seabanks, elevating land levels and other infrastructure development," Sato says. "But more attention is probably needed on supporting the livelihoods of people through direct assistance on employment and homes, or else people will leave."

($1 = 77.7300 Japanese yen)

(Editing by Tomasz Janowski and Matthew Driskill)

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Possible new "fission" found at Japan's wrecked nuclear plant (Reuters)

TOKYO (Reuters) – The operator of tsunami-hit nuclear power plant in Japan said on Wednesday it had found substances in a reactor which could be a result of nuclear fission, a possible setback in efforts to bring the plant to a safe, cold shutdown this year.

The Fukushima Daiichi nuclear power plant was struck by a devastating earthquake and tsunami in March and has released radiation into the atmosphere ever since.

Tokyo Electric Power said that it discovered xenon, a substance produced as a byproduct of fission from the No 2 reactor, and had poured in a mixture of water and boric acid, an agent that helps prevent nuclear reactions, as a precaution.

"It can be assumed that isolated criticality took place for a short period of time judging from the presence of xenon," Tepco spokesman Junichi Matsumoto told reporters.

Criticality is a state when controlled nuclear reactions take place and nuclear power plants harness the resulting heat to produce electricity.

The amount of detected xenon was small and the nuclear fuel in the No 2 reactor is unlikely to have melted down again, Tepco said. The fuel in the No 2 reactor, along with two other reactors, had melted down early in the crisis after the tsunami knocked out the plant's cooling system triggering the world's worst nuclear crisis since Chernobyl 25 years ago.

Analysts said there was minimal risk of further radiation.

Kazuhiko Kudo, a professor of nuclear engineering at Kyushu University, suggested two possibilities.

"Some of the lumps of fuel that melted off early in the accident may have caused the nuclear fission. I would not rule it out completely but this possibility is highly unlikely as many elements, like temperature and the amount water, have to be at a right balance for fission to occur."

The other possibility, Kudo said, was tiny radioactive elements produced by the nuclear reaction early in the crisis colliding and moving neutrons inside the reactor, in turn causing the neutrons to collide and split uranium, causing tiny nuclear fissions.

"The initiating amount in this case is so small that any nuclear fissions would not leave a significant impact," Kudo said.

Tepco said temperature and pressure at the No 2 reactor remained stable.

Through various cooling efforts the utility has succeeded in bringing down the temperatures at the three damaged reactors from levels considered dangerous and hopes to declare a cold shutdown -- when temperatures are stable below boiling point -- this year.

Tepco said in October that the amount of radiation being emitted from the complex had halved from a month earlier, in the latest sign that efforts to bring the facility under control are progressing.

(Additional reporting by Kiyoshi Takenaka; Editing by Tomasz Janowski and Nick Macfie)

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Six months after Japan's tsunami, residents worry their plight is fading from view (video) (The Christian Science Monitor)

Minami-Sanriku, Japan – As memorial services were held across the northeast coastal regions to mark six months since the March 11 earthquake and tsunami, recovery from the vast disaster is proving to be painfully slow in many places.

Some of the worst-hit towns still resemble wasteland. More than 80,000 people remain in temporary accommodation. The nuclear crisis at Fukushima triggered by the tsunami is ongoing, and the new industry minister resigned over the weekend after making disparaging comments about the city.

“We pray for the lost lives and for the missing to be found as early as possible. We hope that people can return to this town and we can hear cheerful voices again,â€

RELATED: IN PICTURES: Japan's nuclear fallout

Mr. Sato had been in the town hall along with 130 staff when the tsunami struck. He was one of only 10 survivors when the 50-ft. waves came across the roof of the building and washed away 20 of the 30 people who had made it that far.

Most of the residents of the town returned for the service from other areas, as Minami-Sanriku remains largely uninhabitable. Thousands of tons of debris were piled into mountains of wood, earth, metal, and concrete along the waterfront.

A boat rests on the second floor of the former city hospital, facing away from the sea, where the tsunami deposited it as the huge wave pulled back to where it came from after obliterating 95 percent of the town.

Related video:

newslook

Recognizing sacrifices Red steel girders are all that is left of the town’s disaster response center where a young local government worker, Miki Endo, famously stayed at her post sounding an alarm and urging residents to evacuate, until the tsunami engulfed the building and she went missing.

People came from as far as Tokyo to pay their respects at the small makeshift shrine that has appeared in the shell of the building, dedicated to Ms. Endo’s sacrifice. Some residents of Minami-Sanriku want the remains of the building to be turned into a permanent monument to her heroism.

A cluster of 20 prefab housing units behind the Bayside Arena, where Sunday morning’s service was held, is now home to a fraction of the town’s people who lost their homes on March 11.

Kaeko Gyoba was in a club for Minami-Sanriku’s elderly residents with her husband when the earthquake struck. They made it up to the fourth floor and were spared as the waves swept through the three stories below, but left the building standing when the waves receded. It was one of the few buildings spared in the entire town.

“We spent two nights up there until a Self-Defense Force helicopter was able to land at the elementary school nearby and get us out,” says Ms. Gyoba.She stayed with relatives near Tokyo after the disaster, but she returned last month to be with the rest of her family, who now occupy five of the small, flimsy-looking temporary houses.

“It’s very tough living here, I just can’t get used to it. There’s nowhere in the town to shop, you need a car to go anywhere, and I worry how cold it will be in the winter,” says Gyoba. “And none of the family have jobs now. They all worked on the ocean, farming seaweed and oysters. Everything was swept away.”

Fading from public consciousness? Despite the nationwide attention that the six-month memorials have been receiving, some of those still struggling to put their lives back together feel they are gradually fading from people’s consciousness in the rest of the country. There is also anger at politicians in Tokyo who they see as more concerned with partisan fighting than focusing on helping the region’s recovery.

Even the leadership contest to replace former Prime Minister Naoto Kan – heavily criticized for his handling of the crisis – was seen as a self-indulgent distraction by many in the region. His replacement, Yoshihiko Noda, has already lost his trade and industry minister, only eight days after being sworn in.

On his first visit to the disaster zone last week, Trade Minister Yoshio Hachiro joked with a reporter accompanying him on the trip about infecting him with radiation by wiping his jacket on the journalist after coming out of the no-go zone around the Fukushima nuclear plant. The minister went on to describe the area around the stricken facility as, “really like a town of death.”

Hachiro’s behavior provoked outrage not just among residents of Fukushima, but across Japan’s north-east coast. For many, the minister’s attitude betrayed a lack of real empathy from Tokyo politicians with the victims of the triple disasters, and his tearful apology afterward convinced few.

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Japan's new PM suffers early blow as minister quits (Reuters)

TOKYO (Reuters) – Japanese Prime Minister Yoshihiko Noda's new government suffered a blow on Saturday after just eight days in office when the trade minister resigned over gaffes on the sensitive topic of radiation from the tsunami-hit Fukushima plant.

The resignation of Trade Minister Yoshio Hachiro, who handles the energy portfolio, will give opposition parties ammunition for attack as Noda strives to end the radiation crisis at the Fukushima plant while tackling a plethora of challenges from rebuilding after the March earthquake and tsunami to curbing huge public debt.

Hachiro submitted his resignation to Noda after reports that he joked with a reporter about radiation from the tsunami-crippled Fukushima nuclear plant, Jiji news agency and other domestic media reported. It was his second remark seen as offensive to victims of the worst nuclear accident in 25 years.

Japanese media said Hachiro had attempted to rub up against a reporter saying "I'll give you radiation" after visiting the Fukushima plant on Thursday.

Opposition party leaders criticised the remark and said that they would press Noda himself over his responsibility for appointing Hachiro, NHK public TV reported.

Hachiro had already been rebuked by Noda and apologised on Friday for calling the deserted area near the plant a "town of death," a comment seen as offensive to disaster victims.

Noda, who took over as Japan's sixth prime minister in five years after predecessor Naoto Kan resigned, will face harsh questioning over his appointment of Hachiro and other novice ministers in a session of parliament expected to begin next week. Defense Minister Yasuo Ichikawa has already come under attack for calling himself an "amateur" in security matters.

Noda, who won a bruising battle to become head of the ruling Democratic Party of Japan, has emphasized the need to restore fractured party unity in his appointments, raising concerns that he had done so at the expense of expertise.

"There was already great mistrust of his personnel appointments," said independent commentator Atsuo Ito.

Noda's quick decision to sacrifice Hachiro would probably help dampen public criticism, but a drop in his voter support could make it harder to obtain help from opposition parties to pass bills in the divided parliament, where they control the upper house and can block legislation, Ito added.

(Editing by Raju Gopalakrishnan)

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Biden lauds Japan's resolve in tsunami zone visit (AP)

SENDAI, Japan – U.S. Vice President Joe Biden on Tuesday praised the resolve of the Japanese people in their efforts to recover from the tsunami and reaffirmed the two countries' alliance as vital for regional peace and prosperity.

In a speech at Sendai's airport, which American military personnel helped clear of debris after the tsunami, Biden spoke of the U.S. public's admiration of Japan after the March 11 disaster, which left about 20,000 people dead or missing and ravaged hundreds of miles (kilometers) of coastline.

"The disaster met its match in the legendary industriousness and relentless perseverance of the Japanese people," he said.

Biden, who also visited China and Mongolia during his eight-day Asian trip, stressed the strong economic and military ties between Japan and the U.S., calling their security alliance the "foundation of this region's security and prosperity for over half a century."

Under the pact, nearly 50,000 American troops are stationed in Japan, many of whom participated in a humanitarian relief mission called "Operation Tomodachi," or Operation Friend, after March's threefold disaster — earthquake, tsunami and nuclear crisis.

Biden's visit comes as China's rising economic, military and political clout somewhat overshadows Japan, which is wrestling with a two-decade economic slump, a bulging deficit and aging population — and now recovery from catastrophe. In his first trip to Asia as vice president, Biden spent five days in China, but will be in Japan only two.

Still, he stressed Japan's importance to U.S. interests in the region.

"The United States is and will remain a Pacific power. America's focus on this critical region will only grow in the years to come as Asia plays an ever-increasing role in the global economy and international affairs," he said. "The anchor of that relationship will be Japan."

Biden laid flowers at the site of a destroyed home not far from the airport and visited evacuees living in temporary housing, where he chatted, shook hands and handed out baseball caps.

Earlier Tuesday, he met with Prime Minister Naoto Kan, who thanked him for the "enormous assistance" from the U.S. after the disaster. Kan said the vice president's trip demonstrates that "Japan is open for business."

Biden told Kan that the American public was impressed with the stoicism and courage of the Japanese people, calling it a model for the whole world.

Kan is widely expected to resign in coming weeks or even days over his administration's perceived lack of leadership in handling the triple crisis.

Referring to the natural disaster in Japan and budget problems in the U.S., Biden told Kan that "there are voices in the world who are counting us out. They are making a very bad bet."

During his time in China, Biden had extensive time with the country's expected future leader, Xi Jinping, and delivered a strong message of the interdependence between the U.S. and China, the world's two biggest economies.

Biden also made the case for continued U.S. economic vitality despite current budget woes and sought to reassure China's leaders and ordinary citizens about the safety of their assets in the United States following the downgrading of America's credit rating.

On Wednesday, Biden plans to visit a U.S. air force base west of Tokyo to thank military and civilian personnel for helping with relief and recovery efforts after the disaster.

___

Associated Press writer Malcolm Foster in Tokyo contributed to this report.

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Japan's Hiroshima city marks atomic bombing (AP)

HIROSHIMA, Japan – The Japanese city of Hiroshima on Saturday marked the 66th anniversary of the bombing, as the nation fights a different kind of disaster from atomic technology — a nuclear plant in a meltdown crisis after being hit by a tsunami.

The site of the world's first A-bomb attack observed a moment of silence at 8:15 a.m. Saturday (2315 GMT Friday) — the time the bomb was dropped on Aug. 6, 1945, by the United States in the last stages of World War II.

The bomb destroyed most of the city and killed as many as 140,000 people. A second atomic bombing Aug. 9 that year in Nagasaki killed tens of thousands more and prompted the Japanese to surrender.

Prime Minister Naoto Kan on Saturday laid a wreath of yellow flowers at Hiroshima Peace Memorial Park and reiterated Japan's promise to never repeat the horrors of Hiroshima, whose suffering continues today because of illnesses passed down over generations.

Japan has long vowed never to make or possess nuclear weapons, but embraced nuclear power as it aimed to rebuild and modernize after the war.

Crowds of people clutching Buddhist prayer beads bowed their heads Saturday in commemorating the dead as pigeons were released during the solemn gathering repeated every year before the skeletal dome of a bomb-ravaged building.

The prime minister, in his speech, also touched on Japan's more recent nuclear catastrophe at the northeastern Fukushima Dai-ichi power plant, where a massive tsunami set off by a 9.0 magnitude earthquake on March 11 knocked out backup generators that powered the plant's cooling mechanisms.

Kan repeated a promise to embrace renewable energy and rely less on nuclear power.

"Japan is also working to revise its energy policy from scratch," Kan said. "I deeply regret believing in the security myth of nuclear power."

Hiroshima mayor Kazumi Matsui stopped short of calling for a nation without nuclear power while retierating his pledge to work toward a world without atomic weapons.

But he acknowledged that the trust people had in the safety of nuclear power had been damaged.

"Some seek to abandon nuclear power altogether with the belief that Mankind cannot co-exist with nuclear energy, while others demand stricter regulation of nuclear power and more renewable energy," he said.

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Japan's 'Super Cool Biz' Concept Saves Energy After Quake (ContributorNetwork)

TOKYO -- Since the earthquake and subsequent tsunami in northern Japan in March, the power industry in Japan has taken huge hits as the levels of available electricity has plummeted in Tokyo, the country's largest city.

The disasters have critically disabled the country's nuclear power plants, many of which have been taken off line for inspection or repair. That leaves a critical power shortage in the northern and eastern parts of the country, where the government has both requested and mandated power-saving measures that have already gone into effect all over. Even the relatively unaffected areas of southern and western Japan are helping by conserving.

The official word for this special electricity cutback is setsuden, which means saving power. This is not just regular conservation, however; this is a country pitching in to help each other recover from the recent trials and tribulations of life.

The Japanese government has mandated that companies reduce their overall energy consumption by at least 10 percent.

Even in the warm summer months, this means that in most offices, the thermostat is set at 28 degrees Celsius, or 82 degrees Fahrenheit. Air conditioning uses a massive amount of electricity, and it is a concrete area in which companies can save.

In past summers, to mildly conserve energy, companies instituted the concept of "Cool Biz," meaning that employees of private companies and government offices can dress down, forgoing the normal attire of shirts, ties and jackets for plain, short-sleeved shirts, thus making everyone comfortable in the higher office temperatures.

This summer, the government has instituted "Super Cool Biz," and it encouraged even higher office temps along with suggesting polo shirts and sandals, going so far as to allow printed Hawaiian shirts as proper office attire. This is quite a change from the normal, buttoned-up black suits of normal Japanese businessmen. In addition, many retail outlets are reducing the lighting in their stores and even convenience stores are reducing the number of refrigerated cases for drinks. All over the city, buildings with more than one elevator are turning off one car in order to encourage energy savings. Signs proclaiming the health benefits of taking the stairs have cropped up everywhere.

In addition to saving energy at the office, the Japanese people are going out of their way to conserve energy at home. In a country where most women run a load of laundry every day, people have changed their washing habits to allow for fuller loads when they launder. In addition to turning up their air conditioning at home, citizens are using remote controls less often, unplugging unused appliances and turning off unnecessary lights.

One of the biggest concessions the Japanese people have made at home is in the bathroom, however. Toilets have become luxury items in recent years, performing a myriad of washing functions in addition to having heated seats. But now people are making the ultimate sacrifice of turning off or unplugging these extraneous functions, all in the name of saving energy.

Japan is a nation made up of stoic, community-minded people. They go about their daily lives and do all of these energy saving measures for the good of the country as a whole. Their attitude and fortitude is to be admired. Far beyond the current crisis, the extreme green practices of Japan could be emulated by other developed nations.

Aimee Weinstein is an American freelance writer who lives in Japan.

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Japan's TEPCO admits further reactor meltdowns (AFP)

TOKYO (AFP) – The operator of Japan's tsunami-hit Fukushima nuclear power plant on Tuesday said it believed fuel had partially melted inside three reactors, as long suspected by experts.

Tokyo Electric Power Company (TEPCO) said new readings on water gauges indicated that the fuel had dropped to the bottom of the containment vessels of units two and three, matching its earlier assessment of unit one.

In all three reactors, relatively low temperatures indicated that the fuel was now mostly covered by water that has been pumped into the vessels, meaning there was no immediate threat of an uncontrolled full meltdown.

"It is highly possible that (partial) meltdowns have occurred at reactors two and three," a TEPCO spokesman said as the firm released its latest analysis of data from the plant after the March 11 quake and tsunami.

"Most of the fuel is believed to have fallen to the bottom (of pressure vessels that contain fuel rods) as has happened in reactor one," he said. "They are now being cooled and are in stable conditions."

Japan's March 11 disaster, which left nearly 25,000 people dead or missing, knocked out cooling systems at the Fukushima plant. This led reactors to overheat, triggering the worst nuclear crisis since Chernobyl 25 years ago.

Reactors four, five and six were under maintenance when the quake hit.

TEPCO estimates it will bring all six reactors to safe "cold shutdown", with low pressure and low temperatures, by some time between October and January, although it will take far longer to dismantle the plant.

Emergency crew have sprayed water into the facility since the quake to cool down the reactors and keep fuel rods in containment pools submerged under water, creating tonnes of toxic runoff that has leaked into the Pacific.

This week TEPCO warned that containment vessels for the radioactive water were almost full.

The company is building a new water treatment facility and has also docked a storage tank called the "megafloat" off the site to hold more low-level contaminated water.

An international panel of nuclear experts arrived in Japan this week to assess the accident and is due to report back to the UN's International Atomic Energy Agency in Vienna in late June.

The IAEA announced last week the mission, headed by Mike Weightman, chief inspector of nuclear installations in Britain, would comprise 20 experts from 12 different countries.

Japan has also decided to set up a panel independent of the nuclear industry and bureaucracy, and mostly made up of academics, to look into the causes of the crisis. It is expected to compile a mid-term report in December and a final report by mid-2012.

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