* Uncertainty over source of high radiation at plant
* People in zone 20-30 km from plant encouraged to leave
* More than 10,000 people dead; 17,500 missing
* China says travellers from Japan found contaminated (Adds comment from operator)
By Mayumi Negishi and Kazunori Takada
TOKYO, March 25 (Reuters) - Radiation fears escalated in Japan on Friday after workers suffered burns as they tried to cool an earthquake-crippled nuclear power station, while the government sowed confusion over whether it was widening an evacuation zone around the plant.
Prime Minister Naoto Kan, making his first public statement on the crisis in a week, said the situation at the Fukushima nuclear complex north of Tokyo was "nowhere near the point" of being resolved.
"We are making efforts to prevent it from getting worse, but I feel we cannot become complacent," he told reporters. "We must continue to be on our guard."
The comments reflected a spike of unease in Japan after several days of slow but steady progress in containing the nuclear accident, which was triggered by a devastating earthquake and tsunami two weeks ago.
The 9.0 magnitude quake and giant waves it triggered left more than 10,000 people dead and 17,500 missing.
As shocking as that toll is, much attention since the March 11 disaster has been on the possibility of a catastrophic meltdown at Fukushima, 240 km (150 miles) north of Tokyo.
The government prodded tens of thousands of people living in a 20 km-30 km (12-18 mile) zone beyond the stricken complex to leave, but insisted it was not widening a 20 km evacuation zone.
China, meanwhile, said two Japanese travellers arriving in the country were found to have very high levels of radiation.
Three workers trying to cool one of the most critical reactors at the plant were exposed to radiation levels 10,000 times higher than normal, raising the possibility of a leak of radioactive material through a crack in the core's container.
That would mean a serious reversal following slow progress in getting the plant back under control.
The reactor, No. 3 of six, is the only one to use plutonium in its fuel mix which is more toxic than the uranium used in the other reactors. The government called for an investigation into why such high levels of radiation had suddenly appeared.
More than 700 engineers have been working in shifts to stabilise the plant but they pulled back from some parts when the workers were hurt on Thursday. Two of the men suffered radiation burns when contaminated water seeped over their shoes .
Nuclear agency official Hidehiko Nishiyama said there was a possibility of damage to the reactor but he later told reporters: "It could be from venting operations and there could be some water leakage from pipes or from valves, but there is no data suggesting a crack."
Hideo Morimoto, director at the Agency for Natural Resources and Energy, also played down fears.
"I feel if the pressure vessel has been seriously damaged, then far more radiation would have leaked," he said.
U.N. nuclear watchdog IAEA said a total of 17 workers had received elevated levels of radiation since the operations began, but the other 14 did not suffer burns.
Two of the reactors are now seen as safe but the other four are volatile, occasionally emitting steam and smoke. But work is advancing to restart water pumps to cool their fuel rods.
Authorities have been using seawater to cool the rectors but that is not ideal as it corrosive and leaves salt deposits that constrict the amount of water that can cool the rods.
Plant operator Tokyo Electric Power Co (TEPCO) said it started injecting freshwater into the pressure vessels of reactors No.1 and No.3 and expected to start injecting freshwater into No. 2 soon.
The United States has offered to help with two barges with 525,000 gallons (2.0 million litres) of freshwater.
RADIATION IN TRAVELLERS
Chinese authorities said two travellers who arrived in the eastern city of Wuxi from Tokyo were found to have levels of radiation that "seriously exceeded the limit" although they presented no risk to others.
Up to now, no one in Japan except workers at the stricken plant has been found with seriously elevated radiation levels, and departing airline passengers are not being screened.
Japan's chief cabinet secretary said 130,000 people living in an outer circle around Fukushima should consider leaving, although he insisted it was because of the difficulties in getting them supplies and was not an evacuation order.
"Given how prolonged the situation has become, we think it would be desirable for people to voluntarily evacuate," Yukio Edano said.
Japan cleared about 70,000 people from a 20-km (12-mile) zone around the plant soon after the earthquake and tsunami.
Edano has maintained there was no need to expand the evacuation zone, but an official at the Science Ministry confirmed that daily radiation levels in an area 30 km (18 miles) northwest of the plant had exceeded the annual limit.
FEAR OVER FOOD
Alarm about radiation is spreading at home and beyond.
Vegetable and milk shipments from near the plant have been stopped, and Tokyo's 13 million residents were told this week not to give tap water to babies after contamination from rain put radiation at twice the safety level.
It dropped back to safe levels the next day, and the city governor cheerily drank tap water in front of cameras.
Experts say radiation from the plant is still generally below levels of exposure from flights or medical X-rays.
Nevertheless, South Korea, Taiwan, Singapore, Australia, the United States and Hong Kong are restricting food and milk imports from the zone. Other nations are screening Japanese food, and German shipping lines are simply avoiding the country.
In Japan's north, more than a quarter of a million people are in shelters. Exhausted rescuers are still sifting through the wreckage of towns and villages, retrieving bodies.
Amid the suffering, though, there was a sense that Japan was turning the corner. Aid flowed to refugees, and phone, electricity, postal and bank services have resumed, though the can still be patchy.
Owners of small businesses have begun cleaning up.
"Everybody on this block has the firm belief that they are going to bring this thing back again," said Maro Kariya in the town of Kamaishi, as he cleared debris from a family coffee shop.
The estimated $300 billion damage makes it the world's costliest natural disaster. Global financial market jitters over the crisis have calmed, though supply disruptions are affecting the automobile and technology sectors.
Foreigner investor buying of Japanese shares actually reached a record high in the week after the disaster, data showed, as bargain-hunters jumped in on an initial plunge.
(Additional reporting by Linda Sieg, Chizu Nomiyama, Sumio Ito, Shinichi Saoshiro and Kiyoshi Takenaka in Tokyo, Yoko Nishikawa, Jon Herskovitz and Chisa Fujioka in northeast Japan; Writing by Robert Birsel; Editing by John Chalmers)