TUSCALOOSA, Alabama (Reuters) – President Barack Obama promised federal aid on Friday to the tornado-ravaged South, where deadly twisters have killed at least 339 people and caused billions of dollars in damage.

Obama toured smashed homes and met survivors on a visit to the worst-hit state, Alabama. It was one of seven southern states mauled by recent tornadoes and storms which have caused insured losses of between $2 billion and $5 billion, according to one catastrophe risk modeler's estimate.

"We are going to do everything we can to help these communities rebuild," Obama told reporters in Tuscaloosa, a university city in Alabama that was devastated by the tornadoes.

The destruction inflicted this week by the twisters, which flattened whole neighborhoods, was the deadliest natural catastrophe since Hurricane Katrina in 2005.

"I have never seen devastation like this. It is heartbreaking," said Obama, accompanied by his wife Michelle and Alabama Governor Robert Bentley. "This is something I don't think anyone has seen before."

In Alabama, emergency officials again raised the death toll from the tornadoes in that state, to 238. Bentley said 1,700 people were injured.

At least 101 more deaths were reported across Mississippi, Tennessee, Arkansas, Georgia, Virginia and Louisiana.

Children were among the victims.

FEMA Administrator Craig Fugate said it was feared the number of deaths would rise as states searched for many people unaccounted for. But the number of missing was not clear.

"We can't bring those who've been lost back. They're alongside God at this point ... but the property damage, which is obviously extensive, that's something we can do something about," Obama said.

"With initial reports of buildings destroyed approaching 10,000, property insurance losses are expected to range from $2 to $5 Billion," catastrophe risk modeling company EQECAT said.

"Tornado activity in April is putting 2011 into the record books," it said, adding that the recent tornado outbreak had involved "hundreds of touchdowns, some tornado tracks reported to be almost a mile wide and tens of miles long causing hundreds of fatalities".

Obama was eager to show that federal relief is on its way and that he is not taking the disaster lightly. His predecessor George W. Bush was fiercely criticized for what was viewed as a slow response to Hurricane Katrina.

Flying into Tuscaloosa aboard Air Force One, Obama and his family saw a wide brown scar of devastation several miles (kilometers) long and hundreds of yards (meters) wide.

Tuscaloosa resident Jack Fagan, 23, was glad that Obama saw the damage. "Perhaps federal funds will help us, but I'm sure it will take longer than they say because it always does."

Recovery could cost billions of dollars and even with federal disaster aid it could complicate efforts by affected states to bounce back from recession.

Tornadoes are a regular feature of life in the U.S. South and Midwest, but they are rarely so devastating.

NUCLEAR PLANT SHUT, INDUSTRIES DAMAGED

The tornadoes hit Alabama's poultry industry -- the state is the No. 3 U.S. chicken producer -- and hurt other manufacturers in the state.

They also halted coal production at the Cliffs Natural Resources mine in Alabama.

The second-biggest U.S. nuclear power plant, the Browns Ferry facility in Alabama, may be down for weeks after its power was knocked out and the plant automatically shut, avoiding a nuclear disaster, officials said.

Apparel producer VF Corp, owner of clothing brands such as North Face and Wrangler Jeans, said one of its jeanswear distribution centers, located in Hackleburg, Alabama, was destroyed and one employee killed.

In Tuscaloosa, the twisters, including one a mile-wide, cut a path of destruction, reducing houses to rubble, flipping cars and knocking out utilities. The death count was expected to rise with many bodies still trapped under debris.

"We are bringing in the cadaver dogs today," said Heather McCollum, assistant to Tuscaloosa's mayor. She put the death toll in the city at 42 but said it could rise.

Of the more than 150 tornadoes that rampaged from west to east across the South this week, the National Weather Service confirmed that one that struck Smithville in Mississippi's Monroe County on Wednesday was a rare EF-5 tornado, with winds reaching 205 miles per hour.

This is the highest rating on the Enhanced Fujita scale that measures tornado intensity.

"The homes here are made well ... but when you are talking about a direct hit, it does not matter," Monroe County Sheriff Andy Hood said. "Right now, those homes are slabs of concrete. There is nothing left."

Across the South, many people were made homeless by the tornadoes and stayed in shelters. Some residents provided food, water and supplies to neighbors whose homes were destroyed.

Tuscaloosa resident Antonio Donald, 50, received help. "I got no light, no water. I have a newborn baby at home, a daughter who is pregnant and an 88-year-old aunt," he said.

The storms left up to 1 million homes in Alabama without power. Water and garbage collection services were also disrupted in some areas.

Alabama's Jefferson County, which is fighting to avoid what would be the largest municipal bankruptcy in U.S. history, suffered damage and 19 dead but said the storms would have little direct impact on its struggling finances because federal grants were expected.

(Additional reporting by Peggy Gargis in Birmingham and Colleen Jenkins in St. Petersburg, Leigh Coleman in Mississippi, Phil Wahba in New York; writing by Matthew Bigg and Pascal Fletcher, Editing by Paul Simao)

DEARBORN, Michigan (Reuters) – A controversial Florida pastor banned last week from protesting at a Detroit-area mosque on Friday cut short a demonstration at a city hall largely drowned out by counter-protesters.

Terry Jones, 59, had vowed to return this week, saying that his ban on demonstrating in front of the landmark Islamic Center of America in heavily muslim Dearborn had violated free speech protections of the Constitution.

"We are here today to speak out on issues that pertain to all American citizens," Jones said, using a wireless microphone at a podium set up at the top of the city hall steps.

Separate barricaded zones were created for Jones' protest on the steps of city hall and for counter-protesters across Michigan Avenue, a busy four-lane street. Jones' 75 supporters were outnumbered by about five-to-one.

Police were a visible presence on both sides of the street and on two rooftops across the street from city hall.

About an hour into his protest, Jones walked down the steps of city hall and approached Michigan Avenue, raising his arms as he continued his speech. About 150 people broke past a barrier and approached Jones and his group.

Some 30 police wearing helmets and protective gear stood shoulder-to-shoulder along the street in front of city hall and the event ended about 15 minutes later.

Dearborn Mayor John O'Reilly Jr. told reporters afterward that the event was stopped for security reasons.

"They asked him not to step toward the barricade and he did," O'Reilly said. "Our job is to serve and protect our community and that's what we did."

Three people were taken into custody and are expected to face misdemeanor charges, a Dearborn Police sergeant said.

Jones had scheduled three hours for the demonstration, but it ended after about 75 minutes and he was escorted by police to a waiting car. Dearborn Police had also picked Jones up at Detroit Metro Airport on Thursday.

Jones told reporters as he left he would return to Dearborn. He also said he had wanted the counter-protesters to join him in reciting the Pledge of Allegiance.

Counter-demonstrators chanted "Terry Jones go home" and as Jones began speaking the driver of a large truck stopped in traffic on Michigan Avenue sounded its foghorn, setting off a cacophony of car horns that drowned out Jones' speech.

A largely unknown pastor until he courted publicity last year with threats to burn the Koran at his tiny fundamentalist church in Gainesville, Florida, Jones had said his planned protest last week was aimed at "radical Islam."

In March, Jones and Wayne Sapp, 42, staged and videotaped a mock "trial" for the Koran and burned a copy of the holy book, a gesture that prompted riots in Afghanistan and widespread condemnation in the U.S. and around the world.

On April 22, Jones and Sapp were jailed briefly after they refused to pay a $1 bond as ordered by District Court Judge Mark Somers. Somers also barred them from the vicinity of the Islamic Center mosque for three years.

Police in Dearborn denied Jones a permit to protest in front of the Islamic Center. He was tried under an obscure Michigan law dating to 1846 requiring people judged to present a risk to public order to post a "peace bond."

Dearborn's city hall was one of a handful of "free speech zones" where city officials indicated they would allow Jones to hold events. It is more than four miles from the Islamic Center, the largest mosque in the United States.

He has appealed the court's ruling and is represented in litigation by attorneys from the Thomas More Law Center, which is "dedicated to the defense and promotion of the religious freedom of Christians, time-honored family values, and the sanctity of human life," according to its web site.

The conservative law center has also represented Christian missionaries who were arrested in Dearborn last year.

(Additional reporting by Teri Murphy; Writing by David Bailey. Editing by Peter Bohan)

SEATTLE (Reuters) – City officials on Friday agreed to pay $1.5 million to the family of a Native American woodcarver fatally shot by a white cop in a confrontation that stoked racial tensions and helped spark a federal probe of Seattle's police force.

A police firearms review board deemed the August 2010 shooting of John Williams, 50, unjustified, ruling that although he was intoxicated at the time he posed no threat "of serious harm" to the officer.

But prosecutors chose not to bring criminal charges against the policeman, Ian Birk, 27, finding insufficient evidence of the criminal intent or malice required under Washington state law to prosecute a law enforcement officer for homicide.

Birk quit the force the same day, February 17.

The civil settlement, announced by the Seattle city attorney's office, was reached through mediation by municipal officials and Williams' relatives.

The settlement document states that $1.25 million will be paid to Williams' estate and $250,000 paid to his mother, Ida Edward of Vancouver, British Columbia.

Birk had insisted he believed Williams was armed and that he shot the man in self-defense. A knife with the blade folded closed was found next to Williams after the shooting.

His death sparked several rallies, attended mostly by minority citizens, protesting policing practices they claimed were racially discriminatory.

The Williams shooting was one of several incidents cited by the American Civil Liberties Union in seeking a U.S. Justice Department investigation into an alleged pattern of excessive force by Seattle police officers, particularly against ethnic and racial minorities. The Justice Department in March said it had launched such an investigation.

Williams' family on March 16 asked the King County Superior Court to convene a citizens grand jury to determine whether Birk should be criminally charged. No ruling has been made.

(Reporting and writing by Laura Myers; Editing by Steve Gorman and Peter Bohan)