Hurricane Earl slapped North Carolina's coast with rain, winds and heavy surf on Friday and swirled up the U.S. eastern seaboard towards New England and Canada as a much tamer storm than feared.

Earl weakened to a Category 1 hurricane with sustained winds of 85 mph (140 kph) as it sped away from the North Carolina coast, where its impact appeared to be less than originally expected.

Earl had been a powerful and fearsome Category 4 storm on the five-step Saffir-Simpson scale of intensity only a day earlier.

For the most part, it appears we have dodged a bullet, North Carolina Governor Bev Perdue said.

Only minimal damage was reported apart from beach erosion from surging waves on North Carolina's Outer Banks low-lying barrier islands. Flooding up to 3 feet (1 metre) 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 and some ferry service resumed.

We did OK, we lucked out. We never lost power. Except for some screen damage, I don't see any real damage, said Mike Howe, a resident of Salvo on Hatteras Island.

The hurricane centre said tropical storm-force winds were likely to reach the coast from Virginia northward to Maine on Friday night. A hurricane warning was in effect for Massachusetts, eastward around Cape Cod, including Martha's Vineyard and Nantucket Island.

Massachusetts Governor Deval Patrick declared a state of emergency, an administrative step that speeds storm relief.

While a direct U.S. landfall was not expected, Earl is forecast to spin northward along the coast during the Labour Day holiday weekend marking the end of the summer vacation season.

Forecasters warned that hurricane-force winds from Earl still extended out 70 miles (110 km) from its centre, so it would not necessarily require a direct landfall to inflict damage from strong wind and high seas.

At 11 a.m. EDT (4 p.m. BST), Earl's centre was about 175 miles (280 km) northeast of Cape Hatteras, and about 350 miles (565 km) south southwest of Nantucket, Massachusetts, the U.S. National Hurricane Centre in Miami said.

GRADUAL WEAKENING SEEN

Gradual weakening was forecast but Earl was expected to remain a large hurricane as it turned northeast and approached new England on Friday night.

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.

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.

The Canadian Hurricane Centre warned residents in parts of the Canadian Maritimes to be on the lookout for tropical storm conditions, with winds gusting up to 70 mph (110 kph).

With the arrival of Earl, high waves and pounding surf can be expected primarily along south and southeast-facing coastlines, it said.

The threat of storm surge flooding is not great for regions around the Bay of Fundy due to a run of neap tides.

The Bay of Fundy, between New Brunswick and Nova Scotia, is known for 50-foot (15-metre) tides -- the highest in the world -- that leave boats stranded high above the water line at low tide and afloat when tides come in.

The low-tide water line can be several miles from the high tide one, allowing people to walk on the ocean floor.

Behind Earl, Tropical Storm Fiona weakened as it moved north over the open Atlantic towards Bermuda. It had top sustained winds of 45 mph (75 kph) and was expected to weaken further as it passed near the British territory early on Saturday.

(Additional reporting by Tom Brown, Kevin Gray and Jane Sutton in Miami, and Joe Silha in New York; Writing by Tom Brown and Kevin Gray; Editing by Pascal Fletcher and Jerry Norton)

Hurricane