Hurricane Rita slammed into evacuated towns and oil refineries in the swamplands of the Texas-Louisiana border on Saturday, stripping roofs off buildings, cutting power to more than a million homes and flooding New Orleans once again.
Rita spared Houston, the fourth-largest US city, a direct hit. But oil city Beaumont, Texas, gambling-and-chemicals center Lake Charles, Louisiana and many of the largest US refiners came into the storm's path. Some refiners were hopeful they would find little damage from Rita.
The storm crashed into the US Gulf Coast with 120mph (193kph) winds and punishing rains, then weakened from Category 3 to Category 1, with 75mph (122kph) winds as it moved inland.
However, it threatened to stall over Texas and could dump up to 2 feet (0.6 metres) of rain over the coming days, raising the prospect of more flooding.
Authorities urged the more than 2 million people who fled Rita not to return home yet.
US President George W. Bush, monitoring federal storm preparations from a military base in Colorado said, "The situation is still dangerous because of potential flooding."
Several neighbourhoods in New Orleans were flooded again, less than a month after Hurricane Katrina killed more than 1,000 people in Louisiana and Mississippi, as water poured over the low-lying city's protective levees.
High winds had uprooted stately oak trees, torn apart some buildings and fanned numerous fires across the region, officials said. More than two million people were without electricity in Texas and Louisiana.
The hurricane caused an estimated $2.5 billion to $5 billion in insured losses in eastern Texas and western Louisiana, catastrophe risk modeler AIR Worldwide said. That was far less damage than Katrina caused three weeks ago.
In Lake Charles, the storm knocked a huge container ship loose from its moorings. Barges were also flung around like toys, officials said.
The Lake Charles airport received significant damage, Lieutenant General Russel Honore, the commander of relief operations in New Orleans, told CNN.
A fire engulfed three buildings in Galveston's historic downtown and another building collapsed as Rita raked the island city, which escaped a feared direct hit.
Centerpoint Energy and another utility company, Entergy, said around 1.2 million customers lost power, meaning more than two million people were in the dark and without air conditioning.
The storm's eye hit land in a swampy, lightly populated area on east of Louisiana's border with Texas, the US National Hurricane Center in Miami said.
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