* About 5,000 people evacuate
* 'All of a sudden it shook and shook and shook'
* Area hit is tourist spot, has industrial salmon farms (Adds quote from Chile president in paragraph 7, details of witness accounts in paragraph 2)
By Felipe Iturrieta and Antonio De la Jara
SANTIAGO, Dec 25 (Reuters) - A major 7.6 magnitude earthquake jolted southern Chile on Sunday, prompting thousands to evacuate coastal areas, but no fatalities or major damage were reported in the tourism and salmon farming region.
Witnesses reported intense shaking in their homes and were shocked by the loud noise. The quake disrupted Christmas celebration plans for thousands of people who fled on foot, in cars and on horseback, seeking higher ground amid torrential rains in some places as sirens warned of a potential tsunami.
"It was the biggest scare of our lives," said Denisse Alvarado, a resident of the southern Chile fishing town of Quellon, located on Chiloe Island, a tourist destination in Chile's Los Lagos region northwest of Patagonia.
Chile's National Emergency Office (ONEMI) lifted both the evacuation order and a tsunami watch three hours after the Christmas Day quake struck, telling nearly 5,000 people who had evacuated they could return to their homes.
Onemi said one bridge in the area was impassable and some roads were closed as crews worked to restore electricity to some 21,000 homes left without power.
Officials had issued a tsunami warning earlier for areas within 1,000 km (621 miles) of the epicenter, just 39 km (24.5 miles) southwest of Quellon, off the coast. But the warning was downgraded to a tsunami watch. Eight mostly small ports in the area were closed, Chile's Navy said.
"It's great news that as of now, we don't have to mourn any deaths as a result of the earthquake in the south," Chilean President Michelle Bachelet said on Twitter. "Our goal is to reestablish normalcy in the affected communities."
The quake was felt on the other side of the Andes mountains in Argentina, in the southwestern city of Bariloche, but structural damage in areas close to the epicenter was limited, witnesses said.
The quake was relatively shallow, at a depth of about 34.6 km (21.5 miles), according to the U.S. Geological Survey (USGS).
"There was a lot, a lot of movement here, but besides that nothing of note, there weren't houses falling," said Alamiro Vera, owner of the Cabanas Hotel in Quellon. "It was just scary, and some things inside fell."
Alvarado, 46, said she was preparing to travel to the countryside to celebrate Christmas with friends when she felt the quake and ran out of her home.
"All of a sudden it shook and shook and shook," Alvarado told Reuters. "I thought the house would fall and the ground would open because it was very strong and very loud."
Though there were dozens of weaker aftershocks, damage was concentrated along a highway that runs across Chiloe Island, where traffic was shut in one section and on smaller roads and bridges.
Local television showed damage to some homes, especially in Quellon and surrounding areas.
Chile, located on the so-called "Pacific Ring of Fire," has a long history of deadly quakes, including a 8.8 magnitude quake in 2010 off the south-central coast, which also triggered a tsunami that devastated coastal towns.
But death and destruction are limited by strict construction codes especially designed to withstand earthquakes.
The area hit by Sunday's quake was south of Valdivia, Chile, where 1,655 people died in a magnitude 9.5 quake in 1960, ranked by the USGS as the most powerful earthquake ever recorded in the world.
The region is home to several industrial salmon farms, but there were no signs of structural damage at farms or processing plants, said Jose Miguel Burgos, director of the National Fish and Aquaculture Service, a government agency.
"Damage was limited, and neither fishing nor aquaculture activity will be affected by this event," Burgos said.
Fishing and agriculture company Empresas AquaChile SA said its employees in the watch zone had been evacuated and were safe, adding that there was no damage to its facilities.
Several other companies have industrial salmon farming operations in the region, including Blumar SA, Cia Pesquera Camanchaca SA, Australis Seafoods SA, Multiexport Foods SA, Invermar SA, and the local unit of Norway's Marine Harvest ASA.
Chile is the world's leading copper producer, but there are no major mines located near the zone affected by the earthquake.
Chile's state-run oil company ENAP said its Bio Bio refinery in southern Chile was operating normally. The Puerto Montt airport was operating normally, a spokesman said.
Latam Airlines Group SA and Sky Airlines said their southern Chile routes were operating without major delays. (Additional reporting by Gram Slattery; Writing by Mary Milliken and Luc Cohen; Editing by Jeffrey Benkoe and Sandra Maler)
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