*

Krathon downgraded to a tropical depression

*

Kaohsiung works to clear flooding, downed trees

*

Transport mostly resumed, some flights still cancelled

*

Death toll remains at two, both on east coast

(Adds Kaohsiung govt comments; paragraphs 4,5,11)

By Yimou Lee, Fabian Hamacher and Ann Wang

KAOHSIUNG, Taiwan, Oct 4 (Reuters) - Southern Taiwan

worked on Friday to clear up damage from flooding and high winds

after Typhoon Krathon slammed into a major port city, while most

of the rest of the island resumed work and financial markets

re-opened.

Krathon, now downgraded to a tropical depression, hit land

in the southwestern city of Kaohsiung, inundating streets,

blowing out the windows of some buildings and scattering debris

amid record-breaking winds.

While the rest of Taiwan resumed work, the governments in

Kaohsiung and neighbouring Pingtung county declared a fourth

successive day off work as they scrambled to pump away

floodwaters, remove fallen trees, and clear roads.

"We hope as fast as possible to resume transport, water and

electricity supplies, so work and life can get back to normal,"

Kaohsiung Mayor Chen Chi-mai told reporters.

The city government said it was tackling more than 2,000

trees that had fallen on roads, but reported only two injuries.

Workers used cranes to remove downed trees and traffic signs

in Kaohsiung, a city and surrounds of 2.7 million people, with

some roads blocked, forcing diversions of traffic and

pedestrians.

"Sandbags didn't work. The wind pressed the water in

anyway," said Clark Huang, 49. "Fortunately it lasted only a

couple of hours and then we started cleaning up."

Engineer Tsai Ming-an was cleaning up his home after

floodwaters about 20 cm (7.8 inches) high washed through the

entire ground floor.

"I have never seen winds like that," said the 51-year-old.

"It was so bad."

Typhoons almost always hit Taiwan's mountainous and sparsely

populated east coast which faces the Pacific Ocean, but Krathon,

unusually, struck its flat west coast.

Nearly 100,000 households, almost all in Kaohsiung and

Pingtung, still had no power on Friday, while 129,000 households

in Kaohsiung lacked water supply.

The fire department said the death toll remained at two,

both men killed on the east coast before the typhoon made

landfall, with one person missing and 667 injured.

Taiwan re-opened its north-south high speed rail line, as

well as most ordinary rail routes except for two branch lines,

but disruptions to air transport continued, with cancellations

of 15 international and 88 domestic flights.

Workers at Kaohsiung port were clearing some freight

containers blown off their stacks to make sure operations went

unaffected, the transport ministry said.

Kaohsiung airport suffered damage to two air bridges, while

the airport on the outlying Orchid Island had landing aids

washed away, though both remained open, the ministry added.

The government also said it was investigating the cause of a

Pingtung hospital fire that broke out as the typhoon was bearing

down, killing nine people.