* Quake death toll could rise above 50,000

* Tens of thousands left homeless

* Water supplies limited; concerns about dam safety

* Schools bear brunt of damage

(Adds premier's comments)

By Emma Graham-Harrison and Aly Song

YINGXIU, China, May 15 (Reuters) - The death toll from China's earthquake could soar to more than 50,000, state media reported on Thursday, as rescuers struggled to help survivors and hope faded for thousands buried under rubble.

Some 20,000 are confirmed dead after Monday's 7.9 magnitude quake and 25,000 were buried in areas rescuers have struggled to reach, battling landslides, buckled roads and collapsed bridges.

Half the epicentre town of Yingxiu, where corpses are lined along the river, has been flattened and 90 percent of the buildings remaining look unsafe.

Zhang Yuejiao, 18, ran out of her school as it collapsed. Some of the biggest casualties appear to have come from school buildings across Sichuan, a province as big as France.

"We have been waiting to try to find out what happened to my brother," she said calmly. "His school collapsed and we haven't been able to find him."

Helicopters arrived every 15 minutes to take the injured away and soldiers had walked in 40 km (24 miles) to help.

Premier Wen Jiabao, a geologist himself, said the rescue operation and disaster relief for victims of the quake were the country's top priority, Xinhua news agency reported.

Wen, who has toured the disaster zone urging on workers and comforting orphaned children, said the government would stick to its "people-first policy", the agency said.

"Saving lives is still our top priority, as long as hope of survival still exists," Wen said.

The Communist Party told officials to "ensure social stability" as the quake spawned rumours of chemical spills, fears of dam bursts and scenes of collective desperation.

Xinhua said 17 "malicious rumourmongers" had been punished for spreading "false information, sensational statements and sapping public confidence".

State media warned of rising risk of disease from unburied bodies and primitive sewage facilities, while calling for faster distribution of food, water, clothing and tents.

Rescuers in the city of Dujiangyan wrapped corpses dragged from the rubble in tarpaulins and sped them to mortuaries.

They were so busy that a notice outside one collapsed school asked parents to search for children at the mortuary in shifts.

About 130,000 army and paramilitary troops assisted the search and rescue effort in Sichuan, sifting through dozens of towns turned to rubble. Xinhua reported that a team of Japanese rescuers had arrived in Chengdu, part of an outpouring of international aid.

HOPES DIMMING

But three days after the quake, hopes of pulling survivors from the ruins dimmed and the waves of rescuers appear to be hampered by lack of specialised equipment.

Still, there were moments of joy and relief. "Thank you, thank you," one 22-year-old said after she was eventually pulled to safety, covering her face against the light in Dujiangyan. She had been trapped, unable to move, under the ruins of a hospital.

A teenage girl told Xinhua how she and her classmates sang pop songs together as they lay trapped and injured in the ruins of their high school.

A teenage girl was freed from the rubble of her school at the cost of an amputated leg, and a 3-year-old girl was rescued after being shielded from the rubble by her dead parents.

Tourists from Britain, the United States and France were airlifted from a panda reserve, but 893 foreigners are still trapped. Victims include a German, the Foreign Ministry said.

The strain from tens of thousands of homeless was growing.

"There is enough food but not enough water. We have only had bottled mineral water the past few days, nothing to cook with," said Wang Yujie, a teacher whose school withstood the quake.

More aid was arriving and efforts at coordination were also improving, with Sichuan setting up a hotline for victims and ambulances with Beijing licence plates on the roads.

More than 12.5 tonnes of relief goods had been airdropped and scores of helicopters were flying in rescuers and aid.

Officials said quilts, tents, food and satellite phones were needed most. The Health Ministry said medical needs ranged from basics like bandages and antibiotics to sophisticated equipment such as ventilators and kidney dialysis machines.

ANGRY RESIDENTS

In some villages near the badly hit area of Beichuan, angry residents complained they had had little to eat and were forced to drink contaminated water.

Many are sleeping outside or in makeshift shelters where the lack of water and blocked toilets has raised fears of disease.

The minister for water resources said dam damage was widespread, compounded by communication problems. He warned of blocked waterways and the difficulty of draining them.

The disaster area is also home to China's chief nuclear weapons research lab in Mianyang, as well as several secretive atomic sites, but no nuclear power stations.

The China Nuclear Engineering and Construction Corp reported that several of its facilities in Sichuan were damaged, but did not mention any radiation leaks. A Western expert with knowledge of the Mianyang lab said it was unlikely it was at serious risk. (Writing by Nick Macfie; Additional reporting by Ben Blanchard, John Ruwitch, Lindsay Beck, Guo Shipeng and Sally Huang; Editing by Richard Balmforth)

AlertNet news is provided by