(Updates with details of damage, Grace weakening to Category 1 storm)
By Tamara Corro
TECOLUTLA, Mexico, Aug 21 (Reuters) - Hurricane Grace battered eastern Mexico with torrential rain and howling winds early on Saturday, causing power outages and downing trees after becoming one of the most powerful storms in years to hit the country's Gulf coast.
Grace was whipping up maximum sustained winds of 125 miles per hour (201 km per hour), a Category 3 on the five-step Saffir-Simpson scale, when it slammed into the coast near the resort town of Tecolutla in Veracruz state in the early morning.
Federal authorities said much of central and eastern Mexico would be hit by torrential rain, but did not provide any early word of the damage caused by Grace.
Civil protection authorities in Veracruz said Grace had caused power cuts and brought down trees. Video footage and photos posted on social media showed some damage to buildings, but there were no immediate reports of casualties.
Grace weakened as it moved inland but the National Hurricane Center warned of a dangerous storm surge - when sea water is pushed above its normal tide levels - as the hurricane struck.
By 7 a.m. CDT (1200 GMT), it was a Category 1 storm with top winds of 90 mph (150 kph). The center was about 60 miles (100 km) east-northeast of Mexico City, the Miami-based center said. https://www.nhc.noaa.gov/text/refresh/MIATCPAT2+shtml/211149.shtml
Before Grace hit land, President Andres Manuel Lopez Obrador urged people in five states to seek shelter.
"I ask the people of the regions of Veracruz, Puebla, San Luis Potosi, Tamaulipas and Hidalgo to seek refuge in high places with relatives and in shelters that are being set up," Lopez Obrador said on Twitter.
Thousands of emergency workers from the civil protection service, the military and state power utility Comision Federal de Electricidad (CFE) were prepared for Grace, he said.
Through Sunday, the NHC forecast Grace would dump 6 to 12 inches (15-30 cm) of rain over swaths of eastern and central Mexico, and up to 18 inches in some areas. The heavy rainfall would likely cause areas of flash and urban flooding, it said.
In Tecolutla, residents spent hours on Friday afternoon taking hundreds of boats onto land to keep them safe.
"Here in Tecolutla, we've had a culture of prevention for many years," said Ricardo Pardinas, who offers boat tours to tourists. "These weather phenomena have caused damage."
Grace was expected to weaken to a tropical storm by Saturday afternoon, the NHC said.
Veracruz and its waters are home to several oil installations, including state oil firm Petroleos Mexicanos' port in Coatzacoalcos and the Lazaro Cardenas refinery in Minatitlan in the south of the state.
Grace hit land well to the north of these cities.
Earlier in the week, Grace pounded Mexico's Caribbean coast, downing trees and causing power outages for nearly 700,000 people, but without causing loss of life, authorities said.
It also doused Jamaica and Haiti, still reeling from a 7.2 magnitude earthquake, with torrential rain. (Reporting by Stefanie Eschenbacher in Mexico City, Tamara Corro in Tecolutla and Anirudh Saligrama in Bengaluru Writing by Dave Graham Editing by William Mallard, Raissa Kasolowsky and Frances Kerry)
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