Hurricane Irene strikes New York, billions in damages feared

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Hurricane Irene battered New York with heavy winds and driving rain on Sunday, knocking out power and flooding some of Lower Manhattan's deserted streets even as it lost some of its strength.

Irene was downgraded to a tropical storm on Sunday morning but was still sending waves crashing onto shorelines and flooding coastal suburbs.

From the state of New Jersey, Governor Chris Christie warned that the damage from the storm to the already battered US economy could reach tens of billions of dollars.

"I've got to imagine the damage estimates will be in the billions of dollars if not the tens of billions of dollars," said Christie, whose state has a long ocean coastline and was particularly badly hit.

Irene has already claimed 11 lives across five American states according to latest reports from the Associated Press.

Back in New York, there was about a foot of water in the streets at the South Street Seaport in Lower Manhattan and the tide seemed to be rising, although there was less damage than many had feared.

Heavy rains and wind also forced the closure of three bridges leading to the Rockaways peninsula facing the Atlantic Ocean, and further east on Long Island sand berms built to hold off the flooding and protect coastal businesses appeared to have failed.

Quiet New York

New York City's normally bustling streets were eerily quiet after authorities ordered tens of thousands of residents to evacuate low-lying areas and shut down its subways, airports and buses.

Forecasters said Irene still posed a serious threat of storm surge that could raise water levels by as much as four to eight feet in coastal areas from Virginia to Massachusetts. Isolated tornadoes in the New York area were possible.

The storm dumped up to eight inches of rain on the Washington region, but the capital appeared to have avoided major damage. Some bridges were closed but airports remained open and transit operated on a normal schedule.

Times Square, often called the crossroads of the world, was almost empty as Irene rolled into the city with full force.

Broadway shows were canceled, coffee was hard to come by with Starbucks stores closed and burgers and fries were in short supply as McDonald's outlets were shut.

In midtown Manhattan, there was a substantial police presence on the streets but most people heeded New York mayor Michael Bloomberg's warning to stay inside.

Worst year in U.S. history

About 370,000 city residents were ordered to leave their homes in low-lying areas, many of them in parts of Brooklyn, Queens and Manhattan.

This year has been one of the most extreme for weather in U.S. history, with $35 billion in losses so far from floods, tornadoes and heat waves.

President Barack Obama, who cut his vacation short on the Massachusetts island of Martha's Vineyard to return to the White House, was keeping a close eye on preparations for the hurricane.

Monday trade on Wall Street remains clouded in doubt with Nasdaq, NYSE, BATS still expected to open but are still awaiting a final decision.