* TOPIX hits near 2-yr low, Nikkei at 6-mth low

  * Stock futures plunge on PM comments

  * Power company stocks are big decliners

  * More than $500 bln in market cap lost this week

  * Bond futures rise as equities drop, dlr/yen steady (Adds links)

  By Chikafumi Hodo and Antoni Slodkowski

  TOKYO, March 15 (Reuters) - Japanese stock futures prices plunged 16 percent on Tuesday as the country's prime minister said radiation levels at a stricken nuclear plant had become high, deepening concerns about the disaster and its likely economic toll.

  Cash stock markets, closed for the regular midday break, were down 7 percent but were set to fall sharply when trading resumes.

  After Naoto Kan's comments, Nikkei equity futures prices dropped sharply, triggering a circuit breaker to halt trade. When it started again, the futures were down more than 16 percent on the day. Kan also said the possibility of radioactive leakage had increased.

  Japanese government bond prices rose as equities fell. The pressure on Japan's already bleak fiscal situation in any reconstruction was likely to be high, with Japan's yield curve steepening some 10 basis points since Friday.

  Unlike Monday, when construction stocks rose, none of the 225 constituents of the benchmark Nikkei average were up on Tuesday.

  Four explosions, including two on Tuesday, have occurred at the Fukushima Daiichi nuclear complex in Japan's ravaged northeastern coast since the magnitude 9.0 quake on Friday, raising concerns about radiation leakage and the longer-term stability of power supply.

  " All focus is on the nuclear crisis. In the situation where the crisis appears to be worsening, foreign investors, domestic fund operators are pulling out from Japanese shares," Hideyuki Ishiguro, a supervisor at Okasan Securities in Tokyo.

 

  The broad TOPIX share index slumped 7 percent by the regular midday break to 787.90, after posting the biggest decline since the 2008 financial crisis on Monday on record volume.

  So far this week, the index is down nearly 14 percent and has shed around $528 billion in market capitalisation.

  The Nikkei share average dropped 6.5 percent by the midday break to 8,999.73. The sharp decline in the futures market will pull the cash market lower when it resumes trade.

  Osaka Nikkei futures fell more than 16 percent.

  Chart support for the Nikkei index lies at around 8,800 -- the low from September 2010.

  " We are making every effort to prevent the leak from spreading. I know that people are very worried but I would like to ask you to act calmly," Kan said in an address to the nation.

  Power companies were the biggest percentage losers in early trading, with shares of Kansai Electric Power and Chubu Electric Power , which both own nuclear plants, down 12 percent.

  Shares of Tokyo Electric Power were untraded with a glut of sellers at the indicated price of 1,341 yen on Tuesday, down 280 yen or 17 percent from Monday's close as an emergency appeared escalate at the utility giant's quake-damaged nuclear reactors in the northeast.

  The firm's credit default swap spreads, contracts that protect against debt default and restructuring, were 150/170 basis points compared with 40 basis points on Friday -- an indication of increasing caution on the outlook for TEPCO.

  Since the quake, Japan's CDS spreads have widened by nearly 20 basis points to 97 basis points, but were still narrower than the record 120 basis points reached in February 2009.

  Ten-year Japanese government bond futures rose 0.40 point to 140.49 , on the way to testing the high for the year hit on Jan. 4 at 140.71.

  In the cash market, the 10-year yield fell to 1.17 percent , the lowest since January 2011. The 5-year to 20-year yield curve, or the difference between the maturities, steepened to 158 basis points.

  " The immediate impact on Japan may be stagflationary: negative for growth and upward pressure on the prices of items in short supply such as rice, some other foods and possibly even some materials needed for reconstruction," said Gerard Lyons, Standard Chartered's chief economist, in a note.

  " The scale of the devastation means that the region impacted may take years to recover fully, as it needs major reconstruction and some of the agricultural areas will need to be repopulated not easy for a country with a rapidly aging population."

  The yen was steady at 81.72 per dollar , relatively stable in the face of the equity market selloff. Traders were on alert for signs of Japanese investor capital repatriation that could push up the yen similar to what happened after the 1995 Kobe earthquake.

  The dollar had touched a low around 80.60 on Monday, less than a yen from the record low of 79.75 yen touched in 1995 on EBS. (Additional reporting by Tokyo News bureau and Masayuki Kitano in SINGAPORE, Writing by Kevin Plumberg)

HONG KONG, March 15 (Reuters) - Hong Kong stocks were set to drop 1 percent at the open on Tuesday as fears of a nuclear meltdown in Japan and rising tensions in the Middle East keep investors from making big bets in choppy markets.

  The benchmark Hang Seng Index was set to fall to 23,110.7. The China Enterprise Index of top locally listed mainland firms was also indicated to open 1 percent lower.

TOKYO, March 15 (Reuters) - The Bank of Japan on Tuesday offered to pump 5 trillion yen ($61 billion) into the banking system, continuing its huge fund injection aimed at easing market jitters amid escalating damage from the earthquake.

  It follows a record 15 trillion yen the BOJ offered in same-day market operations on Monday and its decision to ease monetary policy further through an expansion of its asset buying programme.

  Bids fell short of offers in Monday's market operations in a sign the central bank was feeding more funds than markets can swallow to keep borrowing costs low.

  BOJ Governor Masaaki Shirakawa said on Monday the central bank will continue to offer huge amounts of funds to the market even if bids fall short of offers.

  The Nikkei stock average plunged 4 percent at the outset of Tuesday's trading on news of a fresh explosion at Japan's quake-stricken nuclear power plant.

  The BOJ doubled its asset buying scheme to 10 trillion yen and supplied record funds to banks on Monday to shore up confidence in the economy hit by a triple blow of a massive quake, a tsunami and a nuclear emergency. ($1=81.66 yen) (Reporting by Leika Kihara Editing by Joseph Radford)

* Japan Nikkei shares fall more than 6 percent

  * Japan's refined oil products, gas demand likely to rise

  * North Africa, Middle East unrests support

 

  (Updates prices, nuclear)

  By Ikuko Kurahone

  LONDON, March 14 (Reuters) - Oil fell to two-week lows on Monday, slipping nearly $3 at one point, as concerns over the economic impact from Japan's catastrophic earthquake and tsunami knocked global investor confidence.

  ICE Brent crude was trading $1.56 lower at $112.26 a barrel by 1145 GMT, having struck $111.16, the lowest since Feb. 25. U.S. crude fell $1.49 to $99.67, after hitting an intraday low of $98.55.

  Oil demand from Japan, the world number three energy consumer, was expected to fall in the short to medium term as the country's economic activity was likely to be subdued following devastation caused by the strongest quake on record and the massive ensuing tsunami, analysts said.

  Japan's Nikkei stock average fell more than 6 percent. Global commodities prices mostly fell.

  " Japanese stocks fell sharply as the impact on the Japanese economy from the massive earthquake on Friday is worrying. Asian shares were dragged lower and the trend has been to avert risks, including oil," analysts with Japan's Mizuho Corporate Bank said in its commodities research note.

  Prime Minister Naoto Kan on Sunday said the country was facing its biggest disaster since the second world war. The earthquake and tsumami on Friday devastated a large part of northeast Japan, killing at least 1,000 people, with thousands more missing.

  Nuclear power plants' coolant systems failed and two explosions hit the Fukushima nuclear plant. Operator Tokyo Electric Power Co was struggling to keep coolant water in one reactor core.

  Many other nuclear plants and oil refineries have been shut. Ports and other infrastructure sustained severe damage.

  Refined oil products and gas prices, however, were outperforming crude oil prices due to an expected increase in import demand in coming weeks and months from Japan to cover lost oil refining and nuclear power generation capacity.

  Construction shares were up in Asia as northeast Japan was expected to need extensive reconstruction work.

  Christopher Bellew with Bache Commodities said the unrest in oil rich North Africa and the Middle East would continue to provide support to oil prices.

  In Libya, Muammar Gaddafi's troops battled rebel fighters for control of the strategic oil town of Brega, while France was stepping up efforts to persuade world powers to impose a no-fly zone over Libya.

  More than half of Libya's 1.6 million barrels per day oil output has been shut in due to the unrest.

  In Yemen, heavy gunfire was heard south of the capital on Monday and soldiers deployed in force in Sanaa itself, with a new wave of rallies reported across the country demanding that President Ali Abdullah Saleh quit.

  About 1,000 Saudi soldiers entered Bahrain early on Monday to protect government facilities following recent unrest by the country's Shi'ite Muslim majority, a Saudi official source said. (Reporting by Ikuko Kurahone in London, Alejandro Barbajosa in Singapore editing by Keiron Henderson)

By Chisa Fujioka

  TOKYO (Reuters) - Rescue workers from more than a dozen countries searched ravaged northeastern coastal cities on Monday for survivors of a massive earthquake and tsunami, as an international effort to help Japan cope with its multiple disasters gathered pace.

  Some 70 countries have offered assistance in an outpouring of solidarity with Japan, with help coming not only from allies like the United States but also countries with more strained relations like China, and even from the Afghan city of Kandahar.

  " We have offered our Japanese friends whatever assistance is needed, as America will stand with Japan as they recover and rebuild," said White House spokesman Jay Carney.

  He said two U.S. urban search and rescue teams, with 144 staff and 12 dogs, had begun work at first light on Monday looking for people trapped in the rubble in buildings flattened by the tsunami that followed Friday's 8.9-magnitude quake.

  A 15-member Chinese rescue team was also at work in the main quake zone after landing in Tokyo on a special chartered flight on Sunday, Chinese state news agency Xinhua said.

  Setting aside the acrimony over Japan's wartime atrocities that underpins widespread Chinese public distrust of Japan more than six decades after the end of World War Two, Beijing has wasted no time in expressing sympathy for the disaster.

  " I want to use today's opportunity to extend our deep condolences for the loss of lives in this disaster and to express our sincere sympathy to the Japanese people," Chinese Premier Wen Jiabao said at the end of his annual news conference in Beijing on Monday.

  " China is also a country that is prone to earthquake disasters and we fully empathise with how the Japanese people feel now... The Chinese rescue team arrived in Japan yesterday and we have provided relief supplies to Japan. We will continue to provide further necessary aid to Japan in accordance with their needs."

  South Korea said a 102-member rescue team departed for Japan on Monday aboard three air force C-130 planes. An advance team of five South Korean rescue workers and two search dogs have been in Japan since Saturday.

  Indonesia, hit by a huge earthquake and tsunami in 2004 that killed more than 165,000 in Sumatra and more than 225,000 around the Indian Ocean, said it was committed to send aid to Japan and was awaiting a go-ahead from Tokyo.

  " We are ready to help, and we have offered them. We are discussing what Japan needs now and ways to send it, but our aid, including medical and relief team are at the ready," said foreign ministry spokeswoman Kusuma Habir.

  NUCLEAR EMERGENCY

  The United States is also sharing its expertise in dealing with Japan's nuclear emergency.

  But U.S. warships and planes helping the relief efforts have moved away from Japan's country's Pacific coast temporarily because of low-level radiation from a stricken nuclear power plant in Fukushima, the U.S. Navy said.

  Carney said a U.S. disaster response team sent to Tokyo included " people with nuclear expertise from the Departments of Energy and Health and Human Services as well the Nuclear Regulatory Commission (NRC)."

  " The NRC members are experts in boiling water nuclear reactors and are available to assist their Japanese counterparts," he said.

  The southern Afghan city of Kandahar announced it was donating $50,000 (31,030 pounds) to the " brothers and sisters" of Japan.

  " I know $50,000 is not a lot of money for a country like Japan, but it is a show of appreciation from the Kandahar people," city Mayor Ghulam Haidar Hamidi told Reuters.

  At least a dozen countries have now deployed rescue teams the United Nations said, but conditions in the worst-hit areas remained extremely difficult.

  " Rescue and relief operations are being hampered by continuous aftershocks, tsunami alerts and fires. Many areas along the northeast coast remain isolated and unreachable," a United Nations statement said.

  Britain has sent fire brigade search and rescue specialists and equipment including heavy lifting and cutting equipment, and said it would send nuclear physicists if requested.

  Russia's state nuclear corporation, Rosatom, said it had offered to help in responding to the problems at Japanese nuclear plants if necessary. Russia sent 75 rescuers on Sunday to work in quake-affected areas, the Emergencies Ministry said.

  Teams from Medecins Sans Frontieres (Doctors Without Borders) have reached Sendai, one of the cities nearest the quake epicentre. The group said the medical situation seemed under control, but there was little electricity and no water supply. People needed food, blankets, and water.

  Almost 2 million households were without power in the freezing north, the government said. There were about 1.4 million without running water.

  (Additional reporting by Ben Blanchard and Chris Buckley in Beijing and Stephanie Nebehay in Geneva Writing by Andrew Marshall Editing by John Chalmers)