By Shinichi Saoshiro and Chikako Mogi
TOKYO (Reuters) - Japan hoped power lines restored to its stricken nuclear plant will 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.
Japan is still in shock at both the battle to avert deadly radiation at the six-reactor Fukushima plant and a rising death toll from the March 11 natural disaster.
The world's third-largest economy has suffered an estimated $250 billion of damage, with entire towns in the northeast obliterated in Japan's darkest moment since World War Two.
Tokyo's markets are closed for a holiday on Monday.
Energy Secretary Steven Chu, asked by CNN whether the worst of Japan's nuclear crisis was over, said, "Well, we believe so, but I don't want to make a blanket statement."
Radiation levels at the plant appear to be declining, added U.S. Nuclear Regulatory Commission Chairman Gregory Jaczko.
Elsewhere, investors will be weighing risks to the global economy from Japan's multiple crises, along with conflict in Libya and other unrest in the Arab world.
Easing Japan's gloom briefly, local TV showed one moving survival tale: an 80-year-old woman and her 16-year-old grandson rescued from their damaged home after nine days.
At Fukushima, around 300 engineers were working round-the-clock inside an evacuation zone to contain the worst nuclear accident since Chernobyl, Ukraine, in 1986.
They have been spraying the coastal complex with sea water so fuel rods will not overheat and emit radiation. Hopes for a more permanent solution depend on connecting electricity cables to reactivate on-site water pumps at each of the reactors.
"There have been some positive developments in the last 24 hours but overall the situation remains very serious," said Graham Andrew, a senior official of Vienna-based U.N. watchdog the International Atomic Energy Agency (IAEA).
Working in suits sealed by duct tape, engineers have managed to re-establish power cables to the No. 1, 2, 5 and 6 reactors and plan to start testing systems soon, officials say.
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, milk and water are already stoking anxiety despite Japanese officials' assurances the levels are not dangerous.
The government prohibited the sale of raw milk from Fukushima prefecture and spinach from another nearby area. It said more restrictions on food may be announced later on Monday.
The health ministry asked residents of one village about 40 km (25 miles) from the plant to stop drinking tap water after levels of radioactive iodine three times above the regulated limit were found, Kyodo news agency said.
Much smaller traces of radioactive iodine have also been found in Tokyo, 240 km (150 miles) south of the plant.
"The contamination of food and water is a concern," said another IAEA official, Gerhard Proehl.
Some expatriates, tourists and local residents have left the capital which is normally home to 13 million people, about a tenth of the population. 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.
Official tolls of dead and missing are rising steadily -- to 8,450 and 12,931 respectively on Monday.
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 (32-ft) tsunami made more than 350,000 people homeless.
Food, water, medicine and fuel are short in some parts, and near-freezing temperatures during Japan's winter are not helping.
While Japanese have been focused on the rescue operation rather than recriminations, media and others have raised questions over the government and plant operator Tokyo Electric Power Company's (TEPCO) 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 apologised at the weekend 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.
The Fukushima accident has also prompted an international reassessment of nuclear power.
Physicians for Social Responsibility, a U.S. advocacy group, called for a halt to new nuclear reactors in America, and U.S. Energy Secretary Steven Chu said Japan's crisis may influence future locations for siting reactors.
Prime Minister Naoto Kan, who has kept a low profile during the crisis except for one shouting outburst at TEPCO, had intended to visit the affected region on Monday, but his trip was canceled due to bad weather.
($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, Michael Shields and Fredrik Dahl in Vienna; Writing by Andrew Cawthorne and Jason Szep)