By Scott Malone
HYANNIS, Massachusetts (Reuters) - A weakened but still dangerous Hurricane Earl churned toward the Massachusetts coast on Friday, en route to Canada's Maritime provinces, after slapping North Carolina with heavy wind and rain but causing less damage than feared.
Earl was downgraded to a Category 1 hurricane with sustained winds down to 75 mph as it swirled up the eastern seaboard.
The storm is not forecast to make U.S. landfall, but to pass "very near or just east of (Massachusetts') Cape Cod later tonight and on the coast of Nova Scotia on Saturday," the National Hurricane Center said.
Forecasters said Earl could 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.
"Earl continues to slowly weaken," the National Hurricane Center said in its latest update. Rain and wind from the outer bands of the storm are spreading over New York's Long Island area and southeastern New England, it said.
The 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 threat.
People from the U.S. mid-Atlantic states to Canada's Maritimes braced for impact, while coastal residents further south breathed a sigh of relief.
"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 remained in effect for Massachusetts, eastward around Cape Cod, including the popular resort islands of Martha's Vineyard and Nantucket.
But with Earl losing power rapidly as it crossed colder waters, hurricane center director Bill Read said earlier that the storm could dip below hurricane strength as it passed southern New England overnight. Warnings for most of Maine's coastline have been downgraded to tropical storm watches.
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 the islands of Nantucket and Martha's Vineyard.
LOSING ITS PUNCH
At 8 p.m. EDT (2100 GMT), Earl's center was about 155 miles south-southwest of Nantucket, the hurricane center said. Forecasters warned hurricane-force winds could extend out 70 miles from Earl's center.
For parts of the Massachusetts coast that could spell storm surges, large, damaging waves and beach erosion. High surf is pounding Nantucket and Martha's Vineyard.
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.
Storm-related outages from North Carolina to Connecticut knocked out power to about 3,300 customers, the U.S. Energy Department said -- a small number that showed the mild impact of what was once shaping up to be a monster storm.
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.
Imperial Oil Ltd shut down its Dartmouth, Nova Scotia, refinery as a precaution.
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. 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.
Coastal New England saw windy, rainy weather on Friday evening. Amtrak suspended train service between New York and Boston after falling trees damaged overhead wires in Connecticut. The Boston Red Sox baseball team postponed its scheduled game due to expected poor weather.
CANADA'S DATE WITH EARL
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; and Jeffrey Jones in Calgary; Writing by Matt Spetalnick and Ros Krasny; Editing by Jerry Norton and Sandra Maler)
