* Earl seen upgrading to a hurricane on Sunday
* Dangerous rip currents along U.S. East Coast (Updates with position, hurricane warnings, watches)
MIAMI, Aug 28 (Reuters) - Tropical Storm Earl looked poised on Saturday to become the next hurricane to form over the Atlantic Ocean and was aimed at the Northern Leeward Islands, while Hurricane Danielle weakened to a Category 2 storm.
Hurricane warnings and watches were issued across several Caribbean islands, with Earl expected to to become a hurricane on Sunday, when it is forecast to pass over the Northern Leewards, the U.S. National Hurricane Center said.
According to forecasts, Earl should become a major hurricane within 72 hours, the Miami-based hurricane center said.
The storm had top sustained winds of of 65 miles an hour (105 kph). It was located about 520 miles (837 km) east of the Northern Leeward Islands.
A hurricane warning was issued for Antigua and Barbuda, St. Kitts and Nevis, the British overseas territories of Montserrat and Anguilla and the French overseas islands of Saint Martin and Saint Barthelemy.
There was a hurricane watch for the U.S. and British Virgin Islands and Puerto Rico.
Danielle weakened to a Category 2 storm earlier on Saturday and was forecast to pass well east of Bermuda, where officials canceled a tropical storm warning.
Still, the hurricane center said dangerous surf conditions would affect Bermuda, a British island territory and a center for the global insurance industry, over the next few days.
Danielle caused dangerous rip currents along the U.S. East Coast on Saturday, forcing the rescue of dozens of swimmers, according to media reports.
Bermuda residents said they were now watching out for Earl.
"It looks like we dodged a bullet," 31-year-old bank employee Stuart Roberts said of Danielle. "We are keeping an eye on Earl though." (Reporting by Sandra Maler in Washington and Sam Strangeways in Bermuda; Writing by Kevin Gray; Editing by Peter Cooney)
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