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Scott Bishop, chief engineer at Cameco Corp.'s Cigar Lake uranium mine, gives a tour of a mine shaft that is 1,575 feet (480 meters) deep and just below the ore body in northern Saskatchewan, CanadaGeoff Howe

Fallout from Japan's nuclear catastrophe is spreading across the once-promising uranium industry as powerhouse China signaled a slowing of its nuclear plant build-out program and a Russian producer dropped a deal to buy a developer, citing a "material adverse effect" from the disaster.

Wednesday's moves show the mounting impact from Friday's earthquake and tsunami in northeastern Japan, which devastated the Fukushima nuclear plant, leaving local residents locked in their homes amid growing fears of radiation.

The worsening crisis led to a further sell-off of uranium stocks, some of which have fallen by almost 50 per cent in the past three days.

Japan's nuclear crisis also caused a 10-per-cent drop in the uranium spot price this week to about $60 (U.S.) a pound, reversing a steady climb over the past few months. Until mid-2010, uranium had been hovering at around $40 a pound since the 2008 commodities meltdown.

China's aggressive plans to boost its reliance on nuclear power has helped spur demand for uranium used to fuel nuclear power plants, and in turn uranium prices and share values. However, those hopes were dashed Wednesday when Beijing announced it was tightening approvals and safety procedures for new reactors in response to the disaster in Japan.

Even if China goes ahead with its build-out plans, which many expect, it will likely result in delays and increased costs.

The crisis is also expected to have a lasting impact on the global industry in the near future.

"Even if a meltdown is averted, we believe enough damage to public sentiment has now been done to assume the nuclear renaissance will be dented," Raymond James Ltd. analyst Bart Jaworski wrote in a note to clients.

Still, Mr. Jaworski believes countries such as China, India, Russia and South Korea, which represent about 60 per cent of global nuclear development plans over the next decade, will move forward with their current plans.

About 20 per cent of proposed plants in places such as Japan, Western Europe and North America, could be in "serious jeopardy" due to negative publicity from the crisis, Mr. Jaworski said.

"If a serious meltdown does indeed occur sometime over the next two weeks, the global backlash could be more severe," he wrote.

Investors in uranium stocks are already feeling the blow, with shares falling sharply since Monday.

Shares in top Canadian producer Cameco Corp. fell 8 per cent on Wednesday, for a total drop of 22 per cent so far this week. Uranium One Inc. shares, which have been hit hardest since Japan's nuclear crisis began, fell 5.6 per cent Wednesday for a total three-day drop of about 47 per cent. Meantime, Toronto-listed shares of Mantra Resources Ltd. slipped 33 per cent on Wednesday after Russian state-owned uranium mining company JSC Atomredmetzoloto, also known as ARMZ, said it was reconsidering its $1.2-billion offer to buy the company.

ARMZ said the Japanese nuclear disaster will negatively impact Mantra's valuation. ARMZ said the deal can't go through as is, but is interested in doing an alternative transaction.

Analysts say ARMZ is still interested in Mantra and its Nyota project in Tanzania, and that its decision to pull out of the deal struck late last year could spark a bidding war.

"Perhaps Uranium One and ARMZ will come back to the table together and seek out another Mantra acquisition attempt at a lower valuation," Dundee Securities Ltd. analysts Dave Talbot and Mansur Khan said in a note.

ARMZ closed its deal to buy a 51-per-cent stake in Vancouver-based Uranium One in December as part of a strategy to dominate the uranium market amid an expected rise in global demand for nuclear energy.

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