(Updates death toll, adds details)

BEIJING, July 18 (Reuters) - Thirty-seven people died in a 16-hour thunder storm in southwest China that caused heavy flooding and brought air, road and rail traffic to a halt, the government and state media said on Wednesday.

Chongqing municipality received 266.6 mm (10-½ inches) of rain between Monday night and Tuesday afternoon, the largest volume since records began in 1892, Xinhua news agency said, quoting the local meteorological bureau.

Thirty-two of the deaths were in Chongqing and five were in the neighbouring province of Sichuan, Xinhua said. Both places have already suffered badly from storms and floods this year and were hit by the worst drought in more than a century last summer.

The storm had made the main city and more than 20 suburban towns in landlocked and mountainous Chongqing "isolated islands" as highways were closed, streets flooded, bus services suspended, gas stations closed and power cut off, reports said.

"Some famous cultural relics were damaged by the floods. The mountain city of Chongqing has become a water city," the Ministry of Civil Affairs said in a news release on its Web site (www.mca.gov.cn).

The storm also left 12 people missing and caused some 19,600 homes to collapse Chongqing, home to about 30 million people, and where 267,800 residents were evacuated, the ministry said.

State television showed pictures of people wading through waist-deep water and rescuers evacuating stranded residents.

Hundreds of flights were delayed at Chongqing on Tuesday as the storm unleashed more than 40,000 lightning strikes, leaving more than 5,000 passengers stranded, state media said. Railway lines were disrupted.

More heavy rain is forecast for Chongqing and Sichuan for the next two days and tens of thousands of hectares of crops were destroyed in the storm, bringing overall economic losses of about 2.5 billion yuan ($331 million), the ministry said.

Along the flooded Huai River, which has been overflowing for the past 10 days, some 270,000 displaced residents in the central province of Henan and the eastern provinces of Anhui and Jiangsu were still unable to return home, Xinhua said.

The river was expected to suffer more rain over the next few days, forcing tens of thousands of People's Liberation Army troops to reinforce its embankments with sandbags, it added.

Torrential rain has also wrought havoc in the normally dry far-west region of Xinjing since Monday, destroying over 10,000 houses and killing 19,400 cattle, state media said.

Large swathes of China have been hit by severe flooding this summer which have killed more than 400 people so far, causing economic losses of 37.3 billion yuan ($4.93 billion), according to state media. ($1=7.561 Yuan)

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