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Quake will damage economy, warns PM

New Zealand's prime minister has warned that the country's economic recovery will be damaged by a massive earthquake which left buildings collapsed and roads and railway lines destroyed in the city of Christchurch.

"There will be considerable disruption to the (regional) and national economy in the short term," but activity should pick up as reconstruction gains momentum, prime minister John Key said.

The country's economy has now recorded two quarters of minor growth after struggling to escape 18 months of recession.

Mr Key spoke after army troops took control of central Christchurch, to help police secure streets and badly damaged businesses in the worst-hit centre of the city. The area remained cordoned off and under night-time curfew, with only building and business owners allowed access.

The quake struck at 4.35am on Saturday near the South Island city of 400,000 people, ripping open a new fault line in the Earth's surface, destroying hundreds of buildings and cutting power to the region. No-one was killed, and only two serious injuries were reported.

Mr Key, who toured the city's damaged areas over the weekend, said 430 houses and another 70 buildings, many of them older structures, were already earmarked for demolition because of damage caused by the quake. Around 100,000 of the region's 160,000 homes had sustained some damage, he said.

"I was awe-struck by the power of the earthquake and the damage it has caused in the city," he added. "It was miraculous that nobody was killed."

A quake-damaged building partially collapsed into a suburban street on Monday and officials took urgent steps to bulldoze and remove it. No injuries were reported.

"Police had a unit going past just as it happened and they managed to stop and block (off) the road," Inspector John Price said.

Mr Key said the earthquake would have a short-term negative impact on economic growth, but that loss "would be more than made up by the stimulus impact that takes place with the rebuilding programme".

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