Naoto Kan said the situation at the 40-year-old Fukushima nuclear plant remained worrisome and that the authorities were doing their utmost to stop damage from spreading (see 'Background').
The government had warned of a possible explosion at the No. 3 reactor because of the buildup of hydrogen in the building housing the reactor.
Engineers worked desperately to cool the fuel rods. If they fail, the containers that house the core could melt, or even explode, releasing radioactive material into the atmosphere.
About a fifth of the country's nuclear power generation capacity has been shut down by the disaster. Thermal plants also shut down, forcing the world's third-biggest economy to instigate rolling blackouts to conserve energy.
Almost two million households were without power in the north, the government said. There were about 1.4 million without running water.
Ruling and opposition parties have called a truce to allow the government to focus on dealing with the aftermath of the disaster.
Fear of another quake
The mood has also been darkened by news reports quoting experts as saying there is a 70% chance of another damaging tremor by Wednesday.
Some store shelves continued to be empty and many train lines were shut down as Tokyo commuters returned to work after a weekend glued to horrific images of the tsunami.
Nevertheless, there is no sign of panic in Tokyo, with main commuter trains running and crowds of office workers outdoors getting meals during the lunch hour.
Analysts say the quake may delay but not derail Japan's return toward a moderate economic recovery.
US warships and planes helping Japan's earthquake and tsunami relief efforts have moved away from the country's Pacific coast temporarily because of low-level radiation from a stricken nuclear power plant, the US Navy said on Monday.
The US Seventh Fleet, in a statement, described the move as precautionary measure.
In the meantime, markets stared counting the financial cost of the catastrophe.
The insurance cost of the quake, which hammered the northeast coastline, could reach $35 billion even before the tsunami is accounted for, said risk modeling company AIR Worldwide. That is nearly as much as the entire worldwide catastrophe loss for the global insurance industry in 2010.
A swathe of top-name Japanese manufacturers, including Sony Corp., Toyota Motor Co. and Panasonic have shuttered production lines, with restart efforts hampered by quake aftershocks.
"The economic consequences appear to be greater that we perhaps originally expected," said Tom Byrne, senior vice-president at Moody's Investor Service.
Impact on nuclear industry
Japan's battle to avert a full-scale meltdown could damage the global nuclear energy industry, derailing plans to build dozens of new power plants and forestalling any surge in demand for uranium to fuel them.
The worst nuclear accident since the 1986 Chernobyl explosion could trigger a sharp drop in shares of nuclear plant builders such as General Electric, its Japanese partner Hitachi and France's Areva, as investors reconsider the possibility of a renaissance for the industry.
However, some experts and officials pointed out at the specificity of the Japanese case, where the nuclear incident is seen as a result of the tsunami, not the quake itself.
General Electric Co. (GE.N) Chief Executive Jeff Immelt on Monday said it was too early to know what impact the nuclear power crisis in Japan would have on the nuclear power industry.
(EurActiv with Reuters.)