Hurricane Dean slams Mexico's Gulf coast, weakens

POZA RICA, Mexico, Aug 23 (Reuters) Hurricane Dean ripped into Mexico's Gulf coast with screaming winds and torrential rain that flooded towns and forced thousands into shelters, but then weakened rapidly after moving onshore.

Large trees felled by wind were blocking main roads in the oil town of Poza Rica as Dean, packing winds of up to 160 kph, made landfall in Mexico for the second time.

''It's spectacular, it's very powerful,'' said hotel manager Felipe Torres near where the center of the storm hit land.

No one was reported dead from Dean's two-day rampage in Mexico despite howling winds that earlier put it in the fiercest Category 5 level of hurricanes.

It finally weakened to a tropical storm yesterday afternoon and was not expected to threaten the US coastline.

Dean lost strength soon after landing near Poza Rica but its rains fell in Mexico City more than 200 km away. The US National Hurricane Center said it would fizzle out overnight.

''Dean is expected to dissipate over the mountains of central Mexico tonight or early today,'' it said.

But the state government of Veracruz warned of heavy rains, which often cause mudslides in poor mountain villages after hurricanes pass.

''It's raining and it's going to keep raining intensely in the coming days,'' said Gov Fidel Herrera.

Dean pounded Mayan villages and beach resorts in a run across the Yucatan Peninsula on Tuesday and then passed through the Campeche Sound where the vast majority of Mexico's crude for export to the United States is produced.

Mexico's state oil monopoly, Pemex, said oil production, 80 percent of which was cut due to the storm, would begin to return to normal on Friday.

Dean was the first hurricane in the Atlantic basin to strike land as a Category 5 since Hurricane Andrew in 1992.

Storm surge left large parts of the Ciudad del Carmen oil port underwater. There was flooding throughout Veracruz state, including Poza Rica, which is home to oil storage facilities and energy pipelines, although it is not a major producing area.

PANIC BUYING Rains also battered the old city of Veracruz, a major Gulf port with a tropical feel and often compared to Cuba's Havana.

''There has been panic buying of food in supermarkets,'' said Gabriela Navarrete, 35, who runs a bar in the city, near where Spanish conquistador Hernan Cortes landed in Mexico in 1519 on his way to conquer the Aztec empire.

Dean hammered Mexico's Caribbean resort of Tulum and swallowed sand from the famous beach at Cancun on Tuesday after killing 12 people in Haiti, Jamaica and other parts of the Caribbean.

But the majestic coral reefs on Mexico's Caribbean island of Cozumel, considered one of the world's top diving spots, appeared to have been unscathed by the storm.

Mexico is one of the top three suppliers of US crude imports and Pemex evacuated more than 18,000 oil workers, shut down 2.65 million barrels a day of production -- slightly more than Venezuela's total output -- and closed ports as Dean approached.

Insured losses from the hurricane were likely to reach up to 400 million dollars in Mexico, said AIR Worldwide Corp, risk modeling consultants.

The government did not expect Dean to cause substantial damage or hurt production of coffee and sugar crops in Veracruz state, an Agriculture Ministry spokesman said.

REUTERS CS BST0600