By Shinichi Saoshiro and Kazunori Takada
TOKYO (Reuters) - Many shops in Japan's capital ran out of bottled water on Thursday after a warning of radiation danger for babies from a damaged nuclear plant where engineers are battling the world's worst atomic crisis since Chernobyl.
Nearly two weeks after the earthquake and tsunami that battered the Fukushima complex and devastated northeast Japan, Tokyo's 13 million people were told not to give infants tap water where contamination twice the safety level was detected.
The government urged residents not to panic and hoard bottled water -- but many shops quickly sold out.
"If this is long term, I think we have a lot to worry about," said Riku Kato, father of a one-year-old baby.
Radiation levels above safety norms have also been found in milk and vegetables from the area around Fukushima, 250 km (150 miles) north of Tokyo.
The United States, Hong Kong and Australia have restricted food and milk imports from the zone, while Canada became the latest among numerous nations to tighten screening.
Radiation particles have been found as far away as Iceland, though Japan insists levels are still not dangerous to adults.
The contamination scare is adding to Japan's most testing moment since World War Two after the catastrophe of March 11.
The estimated $300 billion damage makes it the world's costliest natural disaster, dwarfing both Japan's 1995 Kobe quake and Hurricane Katrina that swept through New Orleans in 2005.
Some 25,600 people are dead or missing from the 9.0 magnitude earthquake and ensuing tsunami waves that swept away whole towns on the Pacific coast.
Aftershocks are still coming, and several including a 4.9 earthquake in the east shook Tokyo on Thursday morning.
Nearly 300 engineers, fast becoming national heroes for braving danger inside an evacuation zone, are fighting to cool fuel rods at the plant's six reactors.
Smoke and steam have sometimes been forcing them back.
U.N. nuclear watchdog, the International Atomic Energy Agency (IAEA), which has chided Japan at times for lack of information, said the situation remained "of serious concern" though there had been "some positive developments".
Japan urged the world not to overreact to the crisis, and plenty of experts appeared to back that up.
Jim Smith, of Britain's University of Portsmouth, said the finding of 210 becquerels of radioactive iodine -- more than twice the recommended limit -- at a Tokyo water purifier should not be cause for panic.
"The recommendation that infants are not given tap water is a sensible precaution. But it should be emphasized that the limit is set at a low level to ensure that consumption at that level is safe over a fairly long period of time," he said.
"This means that consumption of small amounts of tap water - a few liters, say - at twice the recommended limit would not present a significant health risk."
Yet some lobby groups are disputing this, suggesting that risks are being under-played.
Physicians for Social Responsibility, a U.S. anti-nuclear group, called for a stricter ban on sales of exposed food.
"There is no safe level of radionuclide exposure, whether from food, water or other sources. Period," said physician Jeff Patterson, a former president of the group.
In Japan's devastated north, more than a quarter of a million people are in shelters.
Exhausted and traumatized rescuers are still sifting through the mud and wreckage where once towns and villages stood.
At the plant, where the worst nuclear drama since Chernobyl in 1986 is playing out, technicians have successfully attached power cables to all six reactors and started a pump at one to cool overheating fuel rods.
Operator Tokyo Electric Power Co (TEPCO) is focused on trying to re-start systems to keep the fuel cool and prevent further radiation leaks from overheating or a complete meltdown, the nightmare scenario.
The Japan disaster has brought a re-assessment of nuclear power around the world.
In line with President Barack Obama's request last week, the top U.S. nuclear regulator on Wednesday approved the launch of a safety review at America's reactors.
Crisis in the world's third-biggest economy -- and its key position in global supply chains, especially for the auto and technology sectors -- has added to global market jitters, also affected by conflict in Libya and unrest in the Middle East.
The official death toll from the disaster has risen to 9,523, but is bound to rise as 16,094 people are still missing.
Some locals and members of Tokyo's large expatriate population left the city right after the earthquake and tsunami.
The capital's streets remain unusually quiet and edgy.
"It's not just the radiation in water. I'm worried about aftershocks and it's possible that things could go bad at the nuclear plant," an office worker who only identified himself by his last name Yamaguchi said outside one shop that had run out of water bottles.
(Additional reporting by Mayumi Negishi, Kazunori Takada and Raju Gopalakrishnan in Tokyo, Yoko Nishikawa in Unosumai, Jon Herskovitz and Chisa Fujioka in Minamisanriku; Frederik Dahl and Sylvia Westall in Vienna,; Kate Kelland in London; Writing by Paul Eckert and Andrew Cawthorne; Editing by John Chalmers)