A chaotic and unprecedented mass evacuation of the region turned deadly when a bus carrying elderly evacuees fleeing the hurricane along a major escape route south of Dallas burst into flames and killed an estimated 24 people.

"Be calm, be strong, say a prayer for Texas," Texas Governor Rick Perry said in the state capital of Austin.

Downgrade

Rita was downgraded to a Category 3 storm as its maximum winds dropped to about 200kph. The storm headed northwest toward the Texas and Louisiana borders, where it was expected to make landfall early on Saturday.

"A further slow weakening is possible before landfall ... but Rita is still expected to come ashore as a dangerous hurricane," the US National Hurricane Centre said.

A bus carrying elderly people
exploded killing 24 people 

US stocks edged higher and crude oil prices fell as the storm weakened, although nearly all crude oil production in the Gulf of Mexico and 30% of US refining capacity was shut down.

Rita was likely to cause a "catastrophic flood" that would inundate the city of Port Arthur in an 6-to 7-metre storm surge, said Jack Colley, director of the Texas Division of Emergency Management.

He predicted 16 hours of hurricane-force winds where the storm hits, as well as an onslaught of tornadoes.

Some stay

Most residents fled the low-lying, largely poor city but
some remained in Port Arthur, fearful of going to a shelter
after the deadly violence and chaos that erupted in New Orleans when Hurricane Katrina hit three weeks ago.

"I'm really scared. We're going to get wiped out," said Annie Johnson, 54, staying behind with daughter Anisha and a year-old granddaughter.

Bush scrapped plans to inspect
the emergency preparations 

Port Arthur Mayor Oscar Ortiz told CNN 95% of the people in his town had left and he was putting out a mandatory evacuation order.

As motorists frantically jammed highways inland from the Texas coast in an evacuation of unprecedented scale, residents of Houston who had not yet escaped were advised to stay home.

Those on the highway faced a danger of becoming trapped in automobiles as the storm approached, authorities said.

"Those people at risk should not get on the highways to
evacuate. People should prepare to shelter in place if they
have not evacuated." Houston Mayor Bill White said.

Storm approaches

At 2pm EDT, the centre of Hurricane Rita was about 305km southeast of Galveston, Texas and about 280km southeast of Port Arthur, Texas, moving about 10mph.

A hurricane warning remained in effect along a 724km stretch from Port O'Connor, Texas, to Morgan City, Louisiana.

Oil production in the area will be
seriously disrupted

In New Orleans, fast-rising water from Rita's outer edge
spilled over a freshly patched levee to flood a neighbourhood
already deserted and devastated by Katrina.

Water from the city's industrial canal, where the levee breached during Katrina, submerged houses in the Ninth Ward where nearly all the homes are already damaged beyond repair.

Water also poured out from under the canal's western barrier, which faces the city's centre.

"There appear to be at least two breaches of some size,"
said Homeland Security Secretary Michael Chertoff in
Washington.

Rising waters

In Baton Rouge, Louisiana, Dan Hitchings of the US Army Corps of Engineers said: "The waters in the industrial canal had risen very rapidly ... far above what was ever predicted or anticipated in the area."

He said workers had patched the levee with sandbags, crushed stone and compacted soil.

More than two million people
have fled the area

"Looking back, we should have put another foot on it," he
said. "Looking back, you say, gosh, I wish we had done a little more."

Katrina killed at least 1069 people and displaced as many as 1 million others. US President George Bush, criticised for a slow federal response to that storm, scrapped plans to visit Texas on Friday to view the emergency preparations.

The White House said he did not want to get in the way and
would instead go straight to Colorado Springs, Colorado, where he was to visit the US Northern Command to check on coordination between state, federal and local authorities.

Bus explosion

Tornadoes were possible in Texas, Louisiana, Mississippi and Alabama.

More than 2 million people were fleeing the Gulf coastal areas including Houston, the fourth-largest US city with a metropolitan population of 4 million.

South of Dallas, a bus carrying elderly patients from a nursing home burst into flames and killed an estimated 24 people on board. Oxygen tanks used by many passengers exploded as the fire engulfed the bus, lighting the morning sky.

The struggles of evacuees in the final hours before Rita's landfall seemed to illustrate how despite years of emergency planning after the 11 September, 2001, attacks, a quick and efficient evacuation of a large urban area could not be assured.

Residents sat trapped in traffic jams of several hours, many running out of fuel as they waited. Oil giant Royal Dutch Shell Plc said its stations around Houston had run out of fuel.

Rita threatened the region's massive oil industry, already slammed by Katrina.