* Cyclone Phailin kills at least seven people, cargo ship feared sunk
* More than half a million in shelters built after 1999 disaster
* Storm loses momentum as it heads inland
* Operations at port halted; major gas field spared
By Sruthi Gottipati and Jatindra Dash
GANJAM/BHUBANESWAR, India, Oct 13 (Reuters) - India's strongest storm in 14 years left a trail of destruction along the country's east coast on Sunday, but little loss of life was reported after close to a million people took refuge in shelters.
Cyclone Phailin was expected to dissipate within 36 hours, losing momentum as it headed inland after making landfall on Saturday from the Bay of Bengal, bringing winds of more than 200 kph (125 mph) to rip up homes and tear down trees.
Authorities in the state of Odisha said the death toll stood at seven people, all killed as winds whipped the coast before the storm slammed in, four by falling trees and one when the walls of her mud house collapsed.
The cyclone was one of three major storms over Asia on Sunday. The smaller Typhoon Nari was approaching Vietnam and Typhoon Wipha loomed over the Pacific.
At least 873,000 people in Odisha and adjacent Andhra Pradesh spent the night in shelters, some of which had been built after a 1999 storm killed 10,000 in the same area. Others sought safety in schools or temples, in an exercise disaster management officials called one of India's largest evacuations.
"We saved lives by putting them in shelters in time," said Odisha's special relief commissioner, J.K. Mohapatra.
There had been concern for 18 fishermen out at sea when the cyclone bore down, but police said on Sunday that all returned safe.
Further northeast, port officials said they feared a Panama-registered cargo ship, the MV Bingo, carrying 8,000 tonnes of iron ore with a crew of 17 Chinese and an Indonesian, had sunk on Saturday as the storm churned across the Bay of Bengal.
"The crew left the ship in a lifeboat around 4 p.m. on Saturday but have not been traced yet," I. Jeyakumar, deputy chairman of the Kolkata Port Trust, told Reuters.
But they were probably alive, he added, as radio contacts had been maintained until early on Sunday morning.
On land, truck driver Jayaram Yadav, transporting cars halfway across India, huddled in the cab of his 28-ton vehicle on Saturday night as the wind howled around him.
"I was just thinking: it's going to topple over - and then it did," said Yadav, who survived unscathed as his cargo of eight vehicles was scattered across a coastal highway.
Television broadcast images of cars flipped on their sides and streets strewn with debris in the silk-producing city of Brahmapur, one of the worst-hit areas.
PEOPLE HEAD BACK HOME
Winds slowed to 90 kph (56 mph) early on Sunday and rain eased. But large swathes of Odisha, including its capital, Bhubaneswar, were without electricity for a second day after the storm tore down power cables. Officials said it was too early to assess damage accurately.
Soldiers and rescue workers in helicopters, boats and trucks fanned out across the two states, but officials sounded confident that a major disaster had been avoided.
"All road communications will be opened by today evening. Most likely electricity will also be restored in the majority of districts," Mohapatra said.
"Now people are going back to their homes. Where their homes have been devastated, they will continue to stay in relief camps. We will provide them food."
The damage was less than had been feared in Mogadhalupadu, a fishing village in Andhra Pradesh, where some people had refused to leave their boats and nets, and seawater had surged into huts near the beach.
"People have come back to the village now," said village chief Jagdesh Dasari, adding that light rain followed the drop-off in gusty winds.
Operations at Paradip port in Odisha, which handles coal, crude oil and iron ore, have been halted since Friday. All vessels were ordered to leave the port.
The storm landed far north of India's largest gas field, the D6 natural gas block in the Cauvery Basin further down the east coast, operated by Reliance Industries.