By Scott Malone
HYANNIS, Massachusetts (Reuters) - A weakened but still dangerous Hurricane Earl churned up the U.S. eastern seaboard toward New England and Canada on Friday after dealing North Carolina's coast only a glancing blow.
Earl was downgraded to a Category 1 hurricane with sustained winds of 80 mph as it swirled away from the North Carolina shore, where it sideswiped the Outer Banks with heavy wind and surf but was much tamer than originally feared.
While Earl was not forecast to make U.S. landfall, it was expected to move "very near or just east of Cape Cod later tonight and on the coast of Nova Scotia on Saturday," the National Hurricane Center said.
Forecasters said Earl could soon diminish to a tropical storm, raising hopes across the Northeast for limiting losses during the Labor Day holiday weekend when airlines and other businesses bank on a final flow of summer tourist dollars.
"Hurricane Earl remains large but is losing its punch," the National Hurricane Center said in its latest advisory.
But the National Hurricane Center warned that Earl -- though no longer packing the power of its former ranking as a fearsome Category 4 storm on the five-step Saffir-Simpson scale -- remained a significant threat.
People from the U.S. mid-Atlantic states to Canada's Maritime provinces battened down and braced for impact, while coastal residents further south cleaned up in the aftermath.
"For the most part, it appears we have dodged a bullet," North Carolina Governor Bev Perdue said.
Minimal damage was reported other than beach erosion from fierce waves on North Carolina's Outer Banks low-lying barrier islands. Flooding up to 3 feet (1 meter) was reported in at least one island village, along with scattered power outages.
Waves surged over the road linking the islands, where 100,000 people were ordered to evacuate as Earl approached. But as the storm moved away, beaches and businesses reopened.
"We lucked out. We never lost power," said Mike Howe, a resident of Salvo on Hatteras Island.
A hurricane warning was in effect for Massachusetts, eastward around Cape Cod, including the resort islands of Martha's Vineyard and Nantucket.
Massachusetts Governor Deval Patrick declared a state of emergency, an administrative step that speeds storm relief.
The Coast Guard closed all ports in southeastern Massachusetts and Rhode Island until the storm passed.
Though relieved Earl was losing strength, some residents were taking no chances and started trickling into 11 emergency shelters opened along Cape Cod and on Nantucket and Martha's Vineyard.
LOSING ITS PUNCH
At 5 p.m. EDT, Earl's center was about 230 miles south-southwest of Nantucket, Massachusetts, the hurricane center said.
Earl was not expected to hit the United States directly but forecasters warned hurricane-force winds still extended out 70 miles from its center.
But with Earl losing power faster than forecast as it crossed colder waters, hurricane center director Bill Read said earlier: "It may even go below hurricane strength about the time it passes by southern New England overnight."
The U.S. Census Bureau estimated 26 million people in coastal counties from North Carolina to Maine could feel Earl's effects by the weekend. No storm has threatened such a broad swath of the U.S. shoreline since Hurricane Bob in 1991.
As oil refineries, drilling platforms and nuclear power plants along the Atlantic coast monitored Earl's path, EnCana Corp said it suspended drilling and pulled personnel from a Nova Scotia rig in Canada.
Exxon Mobil said it had pulled nonessential staff from its Sable field in offshore Nova Scotia.
ConocoPhillips said it implemented hurricane response plans at its 238,000 barrel per day refinery in Linden, New Jersey and a 185,000 bpd refinery in Trainer, Pennsylvania but operations remained unaffected.
The U.S. Energy Information Administration said about 1.1 million barrels per day of oil refining capacity lies in the likely U.S. affected area.
Continental Airlines said it canceled 60 departures on Friday out of its Newark, New Jersey hub for its Continental Express and Continental Connection regional operations. Many U.S. airlines were allowing customers in affected areas to change their weekend flight plans without penalty.
On Nantucket, authorities closed beaches. "A lot of (tourists) have been leaving," said Don Edge, 78, in Chatham.
The Canadian Hurricane Center warned residents in parts of the Canadian Maritimes to be on alert for tropical storm conditions, with winds gusting up to 70 mph.
In Nova Scotia, where Earl is due to make landfall early on Saturday, residents stocked up on emergency supplies.
Behind Earl, Tropical Storm Fiona weakened as it moved north over the open Atlantic toward Bermuda. It had top sustained winds of 45 mph and was expected to weaken further as it passed near the British territory on Saturday.
(Additional reporting by Gene Cherry in Manteo, North Carolina; Tom Brown, Kevin Gray and Jane Sutton in Miami; Pav Jordan in Halifax; Writing by Matt Spetalnick; Editing by Jerry Norton)
