* France's Sarkozy to be first leader to visit since disaster
* Japan calls for calm over fears radiation has tainted exports
* Decades may be needed to scrap damaged nuclear plant (Recasts throughout)
By Shinichi Saoshiro and Yoko Nishikawa
TOKYO, March 31 (Reuters) - The U.N. nuclear watchdog suggested Japan consider widening an evacuation zone around a stricken nuclear plant as French President Nicolas Sarkozy was due to arrive on Thursday, the first leader to visit since a devastating earthquake and tsunami sparked the worst nuclear crisis since Chernobyl in 1986.
In the latest sign of widening consequences from the nuclear crisis, the International Atomic Energy Agency (IAEA) said radiation measured at the village of Iitate, 40 km from Japan's crippled Fukushima Daiichi nuclear plant, exceeded a criterion for evacuation.
Japan has ordered those within a 20 km (12.4 mile) radius from the plant to leave and is encouraging those living in a 20-30 km ring to do the same, and if they don't, to stay inside.
"We have advised (Japan) to carefully assess the situation and they have indicated that it is already under assessment," Denis Flory, a deputy director general of the IAEA, said.
The finding comes as Sarkozy, who chairs the G20 and G8 blocs of nations, is due to meet his Japanese counterpart, Naoto Kan, to show support for Japan's efforts to end its nuclear crisis and rebuild after the March 11 quake and tsunami.
Kan has been criticised by the opposition for not expanding the evacuation zone. Greenpeace this week said it had confirmed radiation levels in this village northwest of the plant high enough to evacuate, but Japan's nuclear safety agency has rebuffed the environmental group's call.
Several countries have banned milk and produce from the areas near the damaged Fukushima Daiichi nuclear plant, 240 km (150 miles) north of Tokyo, due to contamination fears. Japan has itself stopped exports of vegetables and milk from near the plant, which is leaking radiation. [ID:nL3E7EN0JP]
As radiation fears linger, Singapore has told the IAEA that some cabbages imported from Japan had radiation levels up to nine times the levels recommended for international trade.
While vowing to monitor radioactive contamination to prevent potential food safety risks and provide the World Trade Organisation quick and precise information, Japan called on the world not to impose "unjustifiable" import curbs on its goods.
"In return, Japan asked members not to overreact," said a WTO official.
While food makes up only 1 percent of Japan's exports, the tsunami-crippled nuclear plant poses a serious risk to an economy burdened with huge public debt, an ageing population and a big bill for rebuilding, possibly topping $300 billion.
SAFETY UPGRADE
Radioactive iodine in the sea off the damaged plant has hit record levels. The state nuclear safety agency said the amounts were 3,355 times the legal limit and highly toxic plutonium has been detected in the soil at the Fukushima Daiichi plant.
As operators struggle to regain control of the damaged reactors three weeks after the quake and tsunami, smoke was reported to be coming from a second damaged nuclear plant nearby on Wednesday.
Authorities said an electric distribution board powering a water pump was the problem and incident would not cause radiation effect externally.
France, the world's most nuclear-dependent country, has
offered help and already flown in experts from its state-owned
nuclear reactor maker Areva
"The problem which worries TEPCO is water, so we are trying to see, because they are specialists in the treatment of radioactive waste, what they could advocate," said Areva Chief Executive Anne Lauvergeon, who arrived in Japan on Wednesday.
Japan has ordered an immediate safety upgrade at its 55 nuclear power plants, its first acknowledgement that standards were inadequate.
A Reuters investigation showed Japan and plant operator Tokyo Electric Power Co (TEPCO) repeatedly played down dangers at its nuclear plants and ignored warnings, including a 2007 tsunami study from the utility's senior safety engineer. [ID:nL3E7EU0HO]
Nuclear plants will now be required by mid-April to deploy back-up mobile power generators and fire trucks able to pump water, while beefing up training programmes and manuals.
Longer-term solutions such as higher sea walls at nuclear stations will be considered and Japan will review policy to encourage renewable energy.
DECADES TO SCRAP DAMAGED REACTORS
The discovery of highly toxic plutonium in soil at Daiichi this week raised alarm over the disaster, which has overshadowed the humanitarian calamity triggered by the earthquake and tsunami, which left more than 27,500 people dead or missing.
Anger at Japan's nuclear crisis saw more than 100 people protest outside the Tokyo headquarters of TEPCO.
"We don't want to use electric power that can kill people," said Waseda University student Mina Umeda.
But the Japanese government says nuclear power will remain an integral supplier of power. Before the disaster, Japan's nuclear reactors provided about 30 percent of the country's electric power. That had been expected to rise to 50 percent by 2030, among the highest in the world.
TEPCO said it was inevitable it would have to scrap four of its six reactors at the Fukushima Daiichi plant.
But even just scrapping the damaged nuclear reactors may take decades , said Hidehiko Nishiyama, deputy director-general of the Nuclear and Industry Safety Agency (NISA).
"Even if they decide on scrapping the reactors, water spraying needs to be continued to prevent the fuels from overheating, and a sustainable cooling system needs to be established," he said.
"It would be 10 to 20 years before the scrapping process runs its course."
Jesper Koll, director of equity research at JPMorgan Securities in Tokyo, said a drawn-out battle to bring the plant under control and manage the radioactivity being released would perpetuate uncertainty and act as a drag on the economy.
"The worst-case scenario is that this drags on not one month or two months or six months, but for two years, or indefinitely," he said. "Japan will be bypassed. That is the real nightmare scenario."
Japan's Nikkei index has slid about 9 percent since the tsunami while TEPCO shares have fallen almost 80 percent.
TEPCO will test sprinkling synthetic resin in some areas of the Daiichi complex to prevent radioactive dust from flying into the air or being washed into the ocean by rain. The resin is water-soluble, but when the water evaporates, it becomes sticky and contains the dust. Pollution of the ocean is a serious concern for a country where fish is central to the diet. Experts say the vastness of the ocean and a powerful current should dilute high levels of radiation, limiting the danger of marine contamination.
Hundreds of thousands of Japanese whose homes and livelihoods were wiped away by the tsunami that obliterated cities on the northeast coast have heard next to nothing from the government about whether it will help them rebuild.
About 173,600 were living in shelters on high ground above the vast plains of mud-covered debris, with temporary housing for only a few hundred currently under construction. (Additional reporting by Risa Maeda, Jon Herskowitz, Kiyoshi Takenaka, Elaine Lies, Mayumi Negishi, and Yoko Nishikawa in Tokyo, Sylvia Westall and Fredrik Dahl in Vienna; Andrew Callus in Geneva; Writing by Michael Perry; Editing by Sugita Katyal)