(Adds details on outages, Grace weakening to tropical storm)
By Tamara Corro
TECOLUTLA, Mexico, Aug 21 (Reuters) - Storm Grace battered Mexico with torrential rain and howling winds early on Saturday, causing power outages, flooding and downing trees after becoming one of the most powerful hurricanes 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 hurricane on the five-step Saffir-Simpson scale, when it slammed into the coast near the resort of Tecolutla in Veracruz state in the early morning.
It weakened quickly as it moved across Mexico's mountainous interior and had become a tropical storm by mid-morning.
Civil protection authorities in Veracruz said Grace had caused power cuts and brought down trees. Video footage and photos posted on social media showed damage to buildings, but there were no immediate reports of casualties.
Television footage showed flooding in Ciudad Madero in the southern reaches of the state of Tamaulipas near the border of Veracruz. Mexican state oil firm Petroleos Mexicanos's (Pemex) Francisco Madero refinery is in Ciudad Madero.
Mexico City's international airport said some flights had been cancel led due to the hurricane. And national power utility the Comision Federal de Electricidad (CFE) reported 565,000 electricity users had been affected by outages.
By 10 a.m. CDT (1500 GMT), Grace had weakened to a tropical storm, with top winds of 70 mph (110 kph). The center was about 25 miles (40 km) north-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 take cover.
"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 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.
Veracruz and its waters are home to several oil installations, including Pemex's port in Coatzacoalcos and its Lazaro Cardenas refinery in Minatitlan in the south.
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 Additional reporting by Diego Ore in Mexico City Writing by Dave Graham Editing by William Mallard, Will Dunham, Raissa Kasolowsky, Frances Kerry and Diane Craft)
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