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BY CHESTER DAWSON IN SENDAI, JAPAN,
DAISUKE WAKABAYASHI
IN FUKUSHIMA PREFECTURE AND JURO OSAWA IN TOKYO

A huge relief effort continued Sunday in earthquake-ravaged northern Japan as tens of thousands of Self-Defense Forces searched desperately for survivors while more bodies were recovered and concerns rose about a radiation leak at a nuclear power facility in the country.

More than 200,000 Japanese have been moved to relief shelters and millions of homes remain without power and water after the country’s most powerful quake ever struck on Friday.

The National Police Agency said the death toll from the disaster as of midday Sunday in Japan was 801, with 678 missing. There were various reports of discoveries of more …

By MARI IWATA And ANDREW MONAHAN

TOKYO—A building at a troubled Japanese nuclear power facility collapsed Saturday afternoon with smoke billowing out, and officials responded by expanding the evacuation perimeter to a 20-kilometer radius and saying they were preparing to stockpile iodine supplies “just in case.”

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NTV Japan/APTN/Associated Press

Smoke rose Saturday from the Fukushima Daiichi power plant, in an image from broadcaster NTV Japan.

Officials declined, however, to say whether the explosion had occurred specifically at the Fukushima Daiichi No. 1 nuclear reactor, or to confirm media reports that a sharp increase in radiation outside the site had been detected.

Earlier in the day, Tokyo Electric Power Co. had been taking emergency measures to avert a meltdown of a stricken nuclear power plant hit by Friday’s massive tsunami in northern Japan. Those steps appeared to be bringing down the dangerous pressures that had built up in the container, a Tepco spokesman said Saturday afternoon.

Previously, the utility had said there was a risk of a meltdown in the core after the quake cut off power to pumps providing cooling water. That, in turn, could lead to heating of the core, the risk of a meltdown, and the release of radiation.

The plant is located 150 miles, or 240 kilometers, away from Tokyo.

Nuclear Plants in the Zone

Three nuclear plants are close to the quake’s epicenter off the east coast of Honshu.

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A portion of the reactor’s fuel rods, which create heat through a nuclear reaction, had become exposed due to the cooling-system failure. The spokesman for Tepco said 1.5 meters of the 4.5 meter long fuel rods were exposed. It was unclear Saturday afternoon whether the water added by workers had re-covered the rods.

Loss of cooling water resulted in a near meltdown of the Three Mile Island reactor in Pennsylvania in 1979, the worst nuclear incident in U.S. history.

If coolant isn’t restored, the result could be what’s known as a meltdown — extreme heat can melt through the reactor vessel and result in a radioactive release. Reactors have containment domes to catch any release. But there is always the chance that an earthquake could create cracks or other breaches in that containment system.

The Japanese government on Friday declared an emergency at the plant and ordered the evacuation of thousands of residents in the area. Officials steadily increased the evacuation perimeter over the course of the day, extending it late Saturday to 20 kilometers.

By Saturday morning, some 20,000 people had been evacuated from the areas around the two troubled nuclear power plants in the Fukushima prefecture, according to Kyodo News.

Shortly after that, the government nuclear agency confirmed the radiation level at the gate of the plant was eight times as high as normal after some mildly radioactive vapor was released by the plant in an effort to ease pressure. Fukushima Daiichi has six reactors, all built in the 1970s, and three were operating when the quake happened. The No. 1 unit, the oldest and smallest of the reactors, appears to be the main source of the problems.

Asked about the impact of radiation at eight times higher than normal levels, Naoto Sekimura, a professor of quantum engineering at Tokyo University, said on national broadcaster NHK, “This is a minuscule amount. This is not going to have negative impact on the human body.”

Inside the control room at Unit 1, the amount of radiation earlier Saturday reached around 1,000 times normal, the Nuclear and Industrial Safety Agency said, according to Kyodo.

Radiation levels aren’t supposed to rise in a control room, which is designed to allow operators to continue working during emergencies and is equipped with filtration systems and other design features to protect workers from radiation exposure. Nevertheless, experts said that a level that is 1,000 times normal probably isn’t immediately harmful.

Later on Saturday, Tokyo Electric said another nuclear-power plant nearby, Fukushima Daini, was experiencing rises of pressure inside its four reactors. A state of emergency was called and precautionary evacuations ordered. The government has ordered the utility to release “potentially radioactive vapor” from the reactors, but hasn’t confirmed any elevated radiation around the plant.

While officials were still scrambling to deal with the Fukushima reactor problem, at least two strong earthquakes hit near Japan’s—and one of the world’s—largest nuclear reactors early Saturday.

The strength of one of the two quakes on the other side of the Japan Sea coast measured 5 on the Japanese scale in Kashiwazaki City in Niigata prefecture, home to another large nuclear power plant. According to NHK, the national broadcaster, the quakes didn’t affect the operations of the plant where four reactors are in operation. In the past, Tokyo Electric’s seven-reactor Kashiwazaki-Kariwa plant has operated as much as 8,200-megawatts of generating capacity at the site, about 20% of the total energy supply of the company, which has 28 million customers in the Tokyo.

Meanwhile, the three reactors at Tohoku Electric Power Co.’s Onagawa plant in Miyagi, near the epicenter of the quake, also shut down automatically. A few hours later, the company said that it observed smoke coming from the building housing the No. 1 reactor at the plant. The company said it is still checking the safety of the reactor, but said there has been no leakage of radioactive substances reported. All nuclear plants have containment domes designed to capture any accidental release.

The International Atomic Energy Agency said it is ready to provide assistance if requested.

All other Japanese power companies operating nuclear-power plants said their facilities are operating normally.

Nuclear problems are particularly troubling in Japan, which has 56 nuclear reactors, providing about 20% of the nation’s electricity. Eleven reactors shut down as a result of the earthquake, as well as dozens of conventional fossil-fired or hydroelectric plants, leaving millions of people without electricity.

An earthquake measuring 8.9 on the Richter struck Tokyo Bay, Japan Friday killing and injuring hundreds. The quake touched off tsunami warnings as far away as Hawaii and the U.S. pacific coast.

To cope with a severe power shortage expected to result from reactor shutdowns, Tokyo Electric on Saturday asked industrial customers to close or reduce their operations to save electricity and ensure supplies to households, a spokesman said.

At Fukushima Daiichi, the three reactors that were operating when the earthquake struck shut down as they were designed to do, but pressure built up inside them due to malfunctioning of their cooling system.

When nuclear plants lose grid power, emergency on-site generation is supposed to furnish backup power. But some diesel generators at the Fukushima Daiichi plant reportedly failed a short time later. That forced the plant to resort to batteries to furnish electricity to critical instrumentation and controls for at least one of the reactors, experts said.

Reactors at the plant use a special cooling system, called the Reactor Core Isolation Cooling system, to take waste heat and run some critical systems. But experts said that even that system and batteries wouldn’t be able to furnish as much power as was needed, putting pressure on plant officials to quickly find additional sources of electricity.

Neil Wilmshurst, chief nuclear officer for the Electric Power Research Institute, a U.S.-based electric industry research organization, said Tokyo Electric has rigorous emergency procedures in place.

“The first thing you do is assure safe shutdown of reactors and continued cooling of the reactor cores and the spent-fuel pool,” he said. Next comes the process of assessing damage. He said seismic recorders at the site will be analyzed and the data will be compared against the level of shaking the plant is engineered to withstand. Employees examine every part of the plant searching for visible or hidden damage, a process that can take weeks or months.

Experts said that Tokyo Electric has improved its processes and communications since a July 2007 earthquake heavily damaged the Kashiwazaki-Kariwa plant. The entire plant was shut down for 21 months following that quake, and some reactors still aren’t back in operation.

Tokyo Electric was criticized after the 2007 quake for secrecy concerning how it was responding to problems at the Kashiwazaki plant and for rejecting inspection and assistance offers from the IAEA, which is intended to create confidence in the way an emergency is handled.

The Kashiwazaki plant suffered from seismic activity, in the 2007 quake, that exceeded the level for which it was designed, calling into question seismic assumptions made by regulators and the plant operator. There was a radioactive release when water sloshed out of spent-fuel-cooling pools and spilled into the Sea of Japan.

Experts said the global nuclear industry will try to learn from Japan’s experience this time as well.

“This is, no doubt, a significant event for Japan and the nuclear industry around the world” said EPRI’s Mr.Wilmshurst, especially since a new generation of nuclear plants is being built. He added it’s critical to determine whether plants performed as designed and what improvements should be made, such as to emergency power systems.

Tsunami fears spread to many nations with coastal nuclear reactors including Korea, China, Taiwan and the U.S. In Calfornia, PGE Corp’s Diablo Canyon nuclear plant went on alert.

Workers are bringing down dangerous pressures that had built up in the container for the Fukushima Daiichi No. 1 nuclear reactor, a spokesman for Tokyo Electric Power Co. said Saturday afternoon.

“The steps we have taken through relieving the pressure inside the container and adding additional water to cool the rods appear to be succeeding in averting any damage to the reactor core, which was our main priority,” said a Tepco spokesman.

Previously, the utility had said there was a risk of a meltdown in the core after the quake cut off power to pumps providing cooling water. That, in turn, could lead to heating of the core, the risk of a meltdown, and the release of radiation.

The company, known as Tepco, is the owner of the plant, which is located 150 miles, or 240 kilometers, away from Tokyo.

A portion of the reactor’s fuel rods, which create heat through a nuclear reaction, had become exposed due to the cooling-system failure. The spokesman for Tepco said 1.5 meters of the 4.5 meter long fuel rods were exposed. It was unclear Saturday afternoon whether the water added by workers had re-covered the rods.

Loss of cooling water resulted in a near meltdown of the Three Mile Island reactor in Pennsylvania in 1979, the worst nuclear incident in U.S. history.

If coolant isn’t restored, the result could be what’s known as a meltdown — extreme heat can melt through the reactor vessel and result in a radioactive release. Reactors have containment domes to catch any release. But there is always the chance that an earthquake could create cracks or other breaches in that containment system.

The Japanese government on Friday declared an emergency at the plant and ordered the evacuation of thousands of residents in the area. Officials steadily increased the evacuation perimeter and at about 6 a.m. local time, announced that anyone within 10 kilometers should leave the area—up from three kilometers a few hours earlier.

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Zuma Press

An aerial-view of the Japanese nuclear power plant Fukushima Daiichi, Japan

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By Saturday morning, some 20,000 people had been evacuated from the areas around the two troubled nuclear power plants in the Fukushima prefecture, according to Kyodo News.

Shortly after that, the government nuclear agency confirmed the radiation level at the gate of the plant was eight times as high as normal after some mildly radioactive vapor was released by the plant in an effort to ease pressure. Fukushima Daiichi has six reactors, all built in the 1970s, and three were operating when the quake happened. The No. 1 unit, the oldest and smallest of the reactors, appears to be the main source of the problems.

Asked about the impact of radiation at eight times higher than normal levels, Naoto Sekimura, a professor of quantum engineering at Tokyo University, said on national broadcaster NHK, “This is a minuscule amount. This is not going to have negative impact on the human body.”

Inside the control room at Unit 1, the amount of radiation earlier Saturday reached around 1,000 times normal, the Nuclear and Industrial Safety Agency said, according to Kyodo. Attempts to fix the problem at the plant—a buildup of heat and pressure inside the reactor—were going more slowly than planned, according to the government’s nuclear agency, quoted by the NHK broadcaster.

Radiation levels aren’t supposed to rise in a control room, which is designed to allow operators to continue working during emergencies and is equipped with filtration systems and other design features to protect workers from radiation exposure. Nevertheless, experts said that a level that is 1,000 times normal probably isn’t immediately harmful.

Later on Saturday, Tokyo Electric said another nuclear-power plant nearby, Fukushima Daini, was experiencing rises of pressure inside its four reactors. A state of emergency was called and precautionary evacuations ordered. The government has ordered the utility to release “potentially radioactive vapor” from the reactors, but hasn’t confirmed any elevated radiation around the plant.

While officials were still scrambling to deal with the Fukushima reactor problem, at least two strong earthquakes hit near Japan’s—and one of the world’s—largest nuclear reactors early Saturday.

The strength of one of the two quakes on the other side of the Japan Sea coast measured 5 on the Japanese scale in Kashiwazaki City in Niigata prefecture, home to another large nuclear power plant. According to NHK, the national broadcaster, the quakes didn’t affect the operations of the plant where four reactors are in operation. In the past, Tokyo Electric’s seven-reactor Kashiwazaki-Kariwa plant has operated as much as 8,200-megawatts of generating capacity at the site, about 20% of the total energy supply of the company, which has 28 million customers in the Tokyo.

An earthquake measuring 8.9 on the Richter struck Tokyo Bay, Japan Friday killing and injuring hundreds. The quake touched off tsunami warnings as far away as Hawaii and the U.S. pacific coast.

 

Asia Today: Japan Damage Mounts; Radioactive Fears

3:14

Japan’s strongest earthquake on record has killed hundreds and raised fears about radioactive leaks from damaged nuclear power reactors. WSJ’s Jake Lee and Mariko Sanchanta, deputy Tokyo bureau chief, discuss.

 

Asia Today: Massive Earthquake Strikes Japan

3:12

A devastating 8.9-magnitude earthquake has struck Northern Japan. What are the implications for a country already coping with slow economic growth and political instability? WSJ’s Jake Lee and Mariko Sanchanta, deputy Tokyo bureau chief, discuss.

Japan Quake’s Effects

View Interactive

See a map of post-earthquake events in Japan, Hawaii and the U.S. West Coast.

Shaky Ground: Regional Big Ones

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Colliding plates under earth’s surface make Asia Pacific one of the most tectonically active region on earth.

Disastrous Quakes in Japan’s Past

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Associated Press

See a historical gallery of past earthquakes in Japan.

The World’s Biggest Quakes

View Interactive

Associated Press

A photographer looked over wreckage as smoke rose in the background from burning oil storage tanks at Valdez, Alaska, March 29, 1964.

Meanwhile, the three reactors at Tohoku Electric Power Co.’s Onagawa plant in Miyagi, near the epicenter of the quake, also shut down automatically. A few hours later, the company said that it observed smoke coming from the building housing the No. 1 reactor at the plant. The company said it is still checking the safety of the reactor, but said there has been no leakage of radioactive substances reported. All nuclear plants have containment domes designed to capture any accidental release.

The International Atomic Energy Agency said it is ready to provide assistance if requested.

All other Japanese power companies operating nuclear-power plants said their facilities are operating normally.

Nuclear problems are particularly troubling in Japan, which has 56 nuclear reactors, providing about 20% of the nation’s electricity. Eleven reactors shut down as a result of the earthquake, as well as dozens of conventional fossil-fired or hydroelectric plants, leaving millions of people without electricity.

An earthquake measuring 8.9 on the Richter struck Tokyo Bay, Japan Friday killing and injuring hundreds. The quake touched off tsunami warnings as far away as Hawaii and the U.S. pacific coast.

Japan’s strongest earthquake on record has killed hundreds and raised fears about

To cope with a severe power shortage expected to result from reactor shutdowns, Tokyo Electric on Saturday asked industrial customers to close or reduce their operations to save electricity and ensure supplies to households, a spokesman said.

At Fukushima Daiichi, the three reactors that were operating when the earthquake struck shut down as they were designed to do, but pressure built up inside them due to malfunctioning of their cooling system.

When nuclear plants lose grid power, emergency on-site generation is supposed to furnish backup power. But some diesel generators at the Fukushima Daiichi plant reportedly failed a short time later. That forced the plant to resort to batteries to furnish electricity to critical instrumentation and controls for at least one of the reactors, experts said.

Reactors at the plant use a special cooling system, called the Reactor Core Isolation Cooling system, to take waste heat and run some critical systems. But experts said that even that system and batteries wouldn’t be able to furnish as much power as was needed, putting pressure on plant officials to quickly find additional sources of electricity.

A State Department spokeswoman said late Friday afternoon that, contrary to remarks made by Secretary of State Hillary Clinton earlier in the day, the U.S. Air Force didn’t provide assistance to the Japanese nuclear power plant stricken by the quake.

“I’m told that ultimately the Japanese Government handled the situation on its own,” said Julie Reside, a State Department spokeswoman.

Neil Wilmshurst, chief nuclear officer for the Electric Power Research Institute, a U.S.-based electric industry research organization, said Tokyo Electric has rigorous emergency procedures in place.

“The first thing you do is assure safe shutdown of reactors and continued cooling of the reactor cores and the spent-fuel pool,” he said. Next comes the process of assessing damage. He said seismic recorders at the site will be analyzed and the data will be compared against the level of shaking the plant is engineered to withstand. Employees examine every part of the plant searching for visible or hidden damage, a process that can take weeks or months.

Experts said that Tokyo Electric has improved its processes and communications since a July 2007 earthquake heavily damaged the Kashiwazaki-Kariwa plant. The entire plant was shut down for 21 months following that quake, and some reactors still aren’t back in operation.

Tokyo Electric was criticized after the 2007 quake for secrecy concerning how it was responding to problems at the Kashiwazaki plant and for rejecting inspection and assistance offers from the IAEA, which is intended to create confidence in the way an emergency is handled.

The Kashiwazaki plant suffered from seismic activity, in the 2007 quake, that exceeded the level for which it was designed, calling into question seismic assumptions made by regulators and the plant operator. There was a radioactive release when water sloshed out of spent-fuel-cooling pools and spilled into the Sea of Japan.

Experts said the global nuclear industry will try to learn from Japan’s experience this time as well.

“This is, no doubt, a significant event for Japan and the nuclear industry around the world” said EPRI’s Mr.Wilmshurst, especially since a new generation of nuclear plants is being built. He added it’s critical to determine whether plants performed as designed and what improvements should be made, such as to emergency power systems.

Tsunami fears spread to many nations with coastal nuclear reactors including Korea, China, Taiwan and the U.S. In Calfornia, PGE Corp’s Diablo Canyon nuclear plant went on alert.

By JUSTIN LAHART And MARK WHITEHOUSE

U.S. families—by defaulting on their loans and scrimping on expenses—shouldered a smaller debt burden in 2010 than at any point in the previous six years, putting them in position to start spending more.

Total U.S. household debt, including mortgages and credit cards, fell for the second straight year in 2010 to $13.4 trillion, the Federal Reserve reported Thursday. That came to 116% of disposable income, down from a peak debt burden of 130% in 2007, and the lowest level since the fourth quarter of 2004.

With the help of rising stock prices, the decrease in debts put average household net worth at $505,000 at the end of 2010, up 5.1% from 2009, though still well below a peak of $595,000 in the second quarter of 2007, before housing prices plunged.

But any solace from the improving debt numbers has been tempered by worries over rising commodity prices, Chinese trade and the threat to Middle East oil supplies.

The Dow Jones Industrial Average skidded 228.46, or 1.87%, to 11984.61 on Thursday, after new data on Chinese trade raised concerns that Beijing’s export growth might be slowing and unrest broke out in eastern Saudi Arabia.

The shrinking debt burden, though, brings U.S. consumers, whose purchases make up about one-sixth of global demand, closer to the point where they can make a big contribution to the world-wide recovery.

“You’ve seen a steady improvement in household balance sheets” in the U.S., said Joseph Carson, an economist at AllianceBernstein in New York. “That should set the stage for better consumer spending in the year ahead.” He expects consumer spending to grow at an inflation-adjusted rate of 2.8% in 2011, up from 1.8% last year.

Defaults on mortgages and credit cards played a large role in bringing down household debt, underscoring the extent of the financial distress still afflicting U.S. families. Commercial banks wrote off $118 billion in mortgage, credit-card and other consumer debt in 2010, the Fed said. That’s over half the total $208.8 billion drop in household debt, which also includes new mortgages and credit cards.

Morari Shah, a 59-year-old Miami entrepreneur and real-estate investor, is among those taking a radical approach to reducing debts.

Since late 2008, he and his wife have slashed their total debt from nearly $1 million to zero by walking away from the mortgages on four rental properties and paying off two others, all of which lost about half their value in the housing bust. He’s no longer taking up to $4,000 from his monthly income to pay mortgage interest that the rental income didn’t cover.

Instead, he and his wife are fulfilling their goal of building a new $350,000, four-bedroom home in the Dallas suburb of Lewisville, where they plan to retire. “It’s a big relief,” said Mr. Shah. “We went through some rough times, but now I’m comfortable and don’t have to worry about my retirement.”

Mr. Shah isn’t alone. Jon Maddux, chief executive of YouWalkAway.com, a California-based company that advises people on how to default on mortgage debt, says he’s getting between 200 and 250 new clients a month, up 8% from last year and about 50% from 2009.

“I thought we were going to be done with this in one or two years,” said Mr. Maddux, who started the firm in 2008. “Now, we’re three years into it, and it looks like it probably will peak this year or next.” He said the average client sheds about $250,000 in mortgage debt.

People are also fixing their finances the hard way, by boosting the portion of their income that they use to pay down debt. The personal savings rate averaged 5.8% in 2010, up from a low of 1.4% in 2005, and back to a level last seen in the early 1990s.

Meanwhile, getting new loans is difficult as banks pull back on risk, and the private securitization markets that used to support mortgage lending remain largely closed.

But consumer debt, such as auto and student loans, has started growing again in recent months, suggesting that people might be getting in the mood to borrow again.

Even as U.S. households reduce their debt, the country’s overall obligations are rising, with weak tax revenues and efforts to stimulate the economy translating into large budget deficits. Total U.S. nonfinancial debt rose 4.8% to $36.3 trillion, driven largely by a 20% increase in federal debt. Debts of nonfarm, nonfinancial companies rose 5.4% as companies took advantage of low interest rates, but much of that money went to boost their cash coffers, which grew to $1.9 trillion.

Many consumers still have a long way to go to get their finances in order. Some economists believe a healthy household-debt-to-disposable-income ratio would be 100% or lower.

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Tougher bankruptcy rules have made it difficult for some consumers to shed their debts, and a weak job market has left millions without much income to spend.

As of January, wage and salary income stood at $20,953 a person in the U.S., up 2.89% from a year earlier, but still 3.69% below its previous peak in March 2008, according to the Commerce Department.

Linda Sharp, a 56-year-old electronic engineer, filed for bankruptcy in October 2009 after losing a high-paying, global sales job for a big maker of computer peripherals.

She managed to cut the combined monthly debt payments on her home, automobile and other loans to $3,750 a month from about $6,500 a month, but her total debt load of more than $500,000 hasn’t changed.

She recently found a new sales job paying less than one-fifth what she used to make, and is getting some support from a friend to cover monthly expenses.

“I don’t know if I am going to recover,”‘ said Ms. Sharp, who has a son in high school and a daughter in college. “I’ve spent my retirement savings on living while I was looking for a job.”

Write to Justin Lahart at justin.lahart@wsj.com and Mark Whitehouse at mark.whitehouse@wsj.com

BY EVA SZALAY AND TERENCE ROTH

LONDON—Moody’s Investor Service Inc. on Thursday downgraded Spanish government debt to Aa2 with a negative outlook from Aa1 previously, triggering sharp declines for the euro and European bond prices in early European trading.

Moody’s warned that further downgrades were still possible as the costs of bank restructuring and slow economic growth could limit the Spanish government’s ability to improve the country’s financial situation.

The news fanned concerns in European financial markets that high-debt countries in the euro-zone could bring the 17-nation currency closer to a new debt crisis. Earlier this week Standard Poor’s downgraded Greek government debt.

Moody’s said …

BY DAVID ENRICH

LONDON—European officials are poised to let regulators in individual countries use their own definitions of a key gauge of banks’ health in coming “stress tests,” threatening to undermine efforts to buttress faith in the Continent’s ailing financial system.

The new European Banking Authority, which is running the tests on 88 of Europe’s biggest banks, has told regulators and bankers that the exams are likely to rely on each country’s definition of an important capital ratio known as Tier 1, according to people familiar with the matter.

If the plan goes through, some skeptical bankers and regulators worry, it could undermine …