By Shinichi Saoshiro and Chikako Mogi
TOKYO (Reuters) - Japan hoped power restored to its stricken nuclear plant may help solve the world's worst atomic crisis in 25 years, triggered by an earthquake and tsunami that also left more than 21,000 people dead or missing.
Facing their darkest moment since World War Two, Japanese are in shock at both the ongoing battle to avert deadly radiation at the six-reactor Fukushima plant and a still-rising death toll from the March 11 disaster.
The world's third largest economy has suffered an estimated $250 billion of damage with entire towns in the northeast coastal region wiped out.
Easing the gloom briefly, local TV showed one incredible survival tale: an 80-year-old woman and her 16-year-old grandson rescued from the rubble of their freezing house after nine days.
At Fukushima, around 300 engineers are working round-the-clock inside an evacuation zone to contain the worst nuclear accident since Chernobyl, Ukraine, in 1986.
While spraying the coastal complex with sea-water so fuel rods will not overheat, their hopes for a more permanent solution depend on connecting electricity cables to reactivate on-site water pumps at each of the six reactors.
"I think the situation is improving step by step," Deputy Chief Cabinet Secretary Tetsuro Fukuyama said amid news that the workers, in suits sealed by duct tape, managed to connect power cables to the No. 2 and 5 reactors.
Plant operator Tokyo Electric Power Company (TEPCO) said workers aimed to extend power to No. 1 reactor, which is linked to No. 2, and then test systems later on Monday.
The U.N. atomic watchdog in Vienna said there had been some positive developments in the last 24 hours but that the overall situation remained very serious.
If the pumps cannot restart, drastic and lengthy measures may be needed like burying the plant in sand and concrete.
Even if the situation is contained, cases of contaminated vegetables, dust and water will continue to stoke anxiety though Japanese health officials insist the levels are not dangerous.
The government prohibited the sale of raw milk from Fukushima prefecture and spinach from another nearby area, and said more restrictions on food may be announced on Monday.
Tiny traces of radioactive iodine have been found in Tokyo, 240 km (150 miles) south of the plant. Many expatriates and local residents have left the capital. Those who remain are subdued but not panicked.
"There's no way I can check if those radioactive particles are in my tap water or the food I eat, so there isn't much I can really do about it," said Setsuko Kuroi, an 87-year-old woman shopping in a supermarket with a white gauze mask over her face.
AID TRICKLES IN
Official tolls of dead and missing are rising steadily -- to 8,450 and 12,931 respectively on Sunday.
They could jump dramatically since police said they believed more than 15,000 people had been killed in Miyagi prefecture, one of four that took the brunt of the tsunami.
Scores of nations have pledged aid to victims, but little is visible in many devastated towns and villages.
"All we have had is the clothes on our backs. But they are good enough. They've kept us warm through all of this," said Machiko Kawahata as she, her daughter and granddaughter looked for clothes at a drop-off point in Kamaishi, a coastal town.
"We will make do and we will make it through this."
The 9.0-magnitude quake and ensuing 10-meter high tsunami made more than 350,000 people homeless.
Food, water, medicine and fuel are short in some parts, and low temperatures during Japan's winter are not helping.
About 243,000 households in the north still have no electricity and at least 1 million lack running water.
While Japanese have been focused on the rescue operation rather than recriminations, media and others have raised questions over the government and TEPCO's performance.
There have been some suggestions the nuclear drama was taking priority over the human suffering, and that parts of officials' early response was slow and opaque.
TEPCO head Masataka Shimizu issued a statement on Saturday expressing regret for "causing such trouble" at the plant, but has not visited the site or made a public appearance in a week.
Economics Minster Kaoru Yosano put the overall economic damage at above 20 trillion yen ($248 billion).
Japan's crisis spooked markets last week, prompted rare intervention by the G7 group of rich nations to stabilize the yen, and fueled concerns the world economy may suffer because of disrupted supplies to the auto and technology industries.
Japanese markets are closed on Monday for a holiday.
The crisis has prompted an international reassessment of nuclear power. Physicians for Social Responsibility, a U.S. advocacy group, called for a halt to new nuclear reactors there.
Prime Minister Naoto Kan, who has kept a low profile during the crisis except for one outburst at TEPCO, was to visit the affected region on Monday, Kyodo news agency said.
The commander of U.S. military forces in the Pacific, Robert Willard, was also due to meet Japanese officials on Monday to offer support for disaster relief and the nuclear operation.
($1 = 80.610 Japanese Yen)
(Additional reporting by Paul Eckert in Tokyo; Yoko Kubota and Chang-ran Kim in Rikuzentakata; Jon Herskovitz and Chisa Fujioka in Kamaisha; Writing by Andrew Cawthorne and Nick Macfie; Editing by Jeremy Laurence)