(Recasts with updated outages and forecast)
By Chris Keane
NAGS HEAD, N.C., July 4 (Reuters) - A weakened Hurricane Arthur headed for New England waters on Friday after causing only slight damage to the North Carolina coast but spoiling the Independence Day holiday for thousands of Americans.
Arthur, the first hurricane of the Atlantic season, cut power to almost 20,000 homes and businesses, downed trees and cut off barrier islands from the mainland after making landfall on North Carolina's Outer Banks late on Thursday.
State officials said there was minimal damage from the storm, the earliest in the season to hit North Carolina since records began in 1851. A dozen counties were under states of emergency, and the tourist haven of Ocracoke Island was without power.
"This has been a very good day. There have been no casualties or serious injuries reported," North Carolina Governor Pat McCrory said at a news conference in Raleigh.
Arthur hit with top sustained winds of 100 miles per hour (160 km per hour), earning a Category 2 status on the five-step Saffir-Simpson scale. It weakened to a Category 1 as it moved northeast into colder waters of the Atlantic Ocean with 90-mph (145-kph) top sustained winds.
The U.S. Weather Service's National Hurricane Center said the storm was well to the east of the mid-Atlantic coast at 2 p.m. (1800 GMT). It was picking up speed as it moved northeast at 25 mph (20 kph) and was expected to lose force as it moved into colder waters.
"The focus now is over the eastern portion of New England and Atlantic Canada," said Todd Kimberlain, a forecaster with the National Hurricane Center.
Arthur is expected to pass southeast of Massachusetts's Cape Cod on Friday evening, bringing rain and winds of tropical storm strength, or 39 to 73 mph (63 to 117 kph), to the mainland, the center said.
It is forecast to be near or over the Canadian province of Nova Scotia early on Saturday and is expected to weaken to a post-tropical storm system, Kimberlain said.
PICTURES SHAKEN FROM WALLS
McCrory said North Carolina's beaches were open. Thousands of Independence Day beachgoers had left the low-lying Outer Banks ahead of the storm as it disrupted July Fourth festivities and fireworks.
Kathleen O'Neal, owner of Island Artworks on Ocracoke Island, said she could feel her house lift up as the storm passed overhead.
"It was very bad here," she said, adding that many trees had been knocked down and part of a neighbor's roof had been pulled off.
Thousands of tourists were wandering around looking at damage, she said
Hyde County officials on Ocracoke said 40 power poles were down, along with trees, and there was also roof damage; they said power could be restored by late on Sunday. A generator on the island is supplying power on a rotating basis.
State officials said ferry service to Ocracoke was resuming, with only emergency personnel allowed on incoming ferries on Friday. Residents and property owners would be let in on Saturday.
On Hatteras Island, Paul Jones, a retired Maryland state police helicopter pilot, said Arthur's winds had shaken his house until pictures fell off the walls.
"My wind meter was destroyed, ... it stopped at 85 (mph) somewhere around 2 o'clock in the morning," he said.
McCrory's office said Highway 12, the 50-mile (80-km) road connecting Hatteras Island to the mainland, had been blocked by flooding, downed power poles and sand.
The road is expected to be open by late on Sunday. The highway's Bonner Bridge is also being tested for damage, the office said in a statement.
Arthur is the first hurricane to hit the United States since Superstorm Sandy devastated parts of New York and New Jersey in October 2012, causing an estimated $70 billion in damage. (Additional reporting by Gene Cherry in Raleigh, North Carolina; David Adams in Miami, Ian Simpson in Washington, Ted Siefer in New Hampshire, Richard Weizel in Connecticut, and Sandra Maler in Washington; Writing by David Adams and Ian Simpson; Editing by James Dalgleish and Leslie Adler)