KITAKAMI, Japan (AFP) – A new column of smoke rising from an overheating nuclear plant in Japan drove workers out of the smouldering site on Monday, denting hopes for a breakthrough in the post-quake atomic crisis.

Heavy rain in the region disrupted rescue efforts and compounded the misery of tsunami survivors now fearing radioactive fallout from the wrecked Fukushima plant, which has suffered a series of explosions and fires.

Chief government spokesman Yukio Edano said the government was halting shipments of milk and certain vegetables including spinach from regions around the plant after abnormal radiation levels were found in the products.

But "even if you eat and drink them several times it will not be a health hazard. So I would like you to act calmly without reacting," Edano said at a televised news conference.

The workers were temporarily evacuated from part of the quake- and tsunami-hit Fukushima plant in northeast Japan after the "light grey plume of smoke" rose from reactor number three, operator Tokyo Electric Power Co. said.

"Due to this problem, the operator temporarily pulled out the workers, while checking on the condition of the site," a TEPCO spokesman told reporters, without specifying the cause.

The smoke at the Fukushima No. 1 plant, 250 kilometres (155 miles) northeast of Tokyo, was not believed to have been caused by all-important efforts to restore power to the reactor, officials said.

"Currently we are not in a bad situation with respect to the nuclear reactor and radiation levels... we are closely monitoring the situation," Edano said.

Engineers at the stricken Fukushima facility are racing to fix disabled cooling systems and restore power, as fire trucks spray water to help cool reactor fuel-rod pools.

The cooling systems -- designed to protect the plant's six reactors from a potentially disastrous meltdown -- were knocked out by the earthquake and tsunami that struck Japan's northeast Pacific coast on March 11.

Minutes before the crews' evacuation, Prime Minister Naoto Kan acclaimed "slow but steady progress" in dealing with the atomic crisis.

"Workers' efforts at the risk of their lives have made the situation progress little by little," Kan said, according to a government spokesman.

Asked on CNN earlier if the worst was over at the ageing facility, US Energy Secretary Steven Chu said: "We believe so, but I don't want to make a blanket statement."

The natural disaster -- Japan's deadliest since 1923 -- has left 8,649 people dead and 13,262 missing, after entire communities were swept away by the horrific tsunami or levelled by the record 9.0-magnitude quake.

The World Bank said the disaster could cost the world's third-biggest economy up to $235 billion. That would be the equivalent to 4.0 percent of output, in an economy that has already been struggling for years.

But growth should pick up in subsequent quarters "as reconstruction efforts, which could last five years, accelerate", the bank said in a new report on the Asia-Pacific region.

Tokyo financial markets were closed on Monday for a national holiday. They took a pummelling for most of last week, driving global markets lower, before rallying on Friday when the G7 pledged currency intervention to curb the yen.

Japan got a vote of confidence from legendary investor Warren Buffett, who said in Seoul Monday: "I'm not looking at Japan's economic future differently from 10 days ago... extraordinary events offer (a) buying opportunity."

Amid the devastation on the splintered northeast coast, there was an astonishing tale of survival with the discovery Sunday of an 80-year-old woman and her 16-year-old grandson alive under the rubble.

Their house in Ishinomaki city collapsed but the teenager was able to reach blankets, food and drink, helping them survive for more than a week, as they huddled together to keep warm in the region's freezing temperatures.

The boy, Jin Abe, sounded frail as he spoke from his hospital bed in Ishinomaki, one of many places that bore the furious brunt of the record quake and towering tsunami.

"We found some water and snacks, so we ate them," he said. "We heard people outside but we couldn't escape."

His father Akira Abe told reporters at the hospital: "He doesn't talk much, but I always thought he was a great man. This time he really proved it."

But with nearly half a million tsunami survivors huddled in threadbare, chilly shelters and the threat of disaster at the nuclear plant stretching frayed nerves, the mood in much of Japan remained grim.

"We are really short of water and food. We don't have enough toilets either," said Tsutomu Nakai, a businessman now in charge of relief efforts for about 1,000 people sleeping at a school in the town of Rikuzentakata.

But he added: "People are doing the things they are best at to help the whole community out."