(Updates with hurricane watch issued, storm locations)

By Jane Sutton

MIAMI (Reuters) - Powerful Hurricane Earl churned
toward the eastern U.S. seaboard Tuesday and looked to
sideswipe the densely populated coast from North Carolina to
New England, the U.S. National Hurricane Center said.

Forecasters expected the main core of the Category 4
hurricane to stay offshore as Earl moved parallel to the coast
during the upcoming Labor Day holiday weekend that
traditionally marks the end of summer.

A hurricane watch was issued for most of the North Carolina
coastline as officials warned any westward deviation from the
forecast track could prompt coastal evacuations or even bring
the storm ashore.

"A small error of 100 miles in the wrong direction
could be a huge impact difference," National Hurricane Center
Director Bill Read told a conference call with journalists.

"Even a minor shift back to the west could bring impacts to
portions of the coastline from the mid-Atlantic northwards."

The hurricane watch, issued by the Miami-based hurricane
center, alerts residents that hurricane conditions -- sustained
winds of 74 mph -- are possible within 48 hours. It
covered the North Carolina coastline from Surf City to Duck,
including the Pamlico and Albemarle Sounds.

Earl, the second major hurricane of the 2010 Atlantic
season, was moving west-northwest in the open Atlantic on
Tuesday, keeping well east of the Turks and Caicos Islands.

At 5 p.m. it was centered about 1,000 miles
south-southeast of Cape Hatteras, North Carolina.

Earl was forecast to clip the barrier islands of North
Carolina's Outer Banks Thursday night and bring drenching
rain, rough seas, pounding surf and gusting wind to the
Atlantic Coast from North Carolina to New England and Atlantic
Canada.

Evacuations were ordered, or expected, for Wednesday for
the most vulnerable spots on the Outer Banks, including the
Cape Lookout National Seashore and Ocracoke Island, which has
about 800 year-round residents and is accessible only by boat.
It is one of the barrier islands where the pirate Blackbeard
once roamed.

Earl had top sustained winds of 135 miles per hour
, making it a Category 4 storm on the five-step
Saffir-Simpson intensity scale. It was expected to stay just
shy of a maximum Category 5.

SOME UNCERTAINTY OVER FINAL PATH

It was too early to predict how close the hurricane would
come to New York when it churned offshore east of the city
during the weekend.

"We're just telling everybody to keep their eyes on the
track and just keep checking back," hurricane center
meteorologist Barry Baxter said.

The hurricane center said Earl's forecast track in the
coming days shifted slightly to the west, which could bring its
outer fringes closer to the U.S. coast.

U.S. and Canadian East Coast oil refiners said they were
monitoring Earl but that it was too early to begin to take any
precautionary measures.

Hurricane Earl posed no threat to major U.S. oil and gas
installations in the Gulf of Mexico.

Tropical storm warnings and watches were in effect for the
Turks and Caicos, where flights were suspended, and for the
sparsely populated southeast Bahamas.

Monday, Earl battered the northeastern Caribbean islands
and Puerto Rico, downing power lines, blowing off roofs,
toppling trees and causing some flooding. There were no
immediate reports of casualties.

"We have been quite fortunate. We did not take a direct hit
... it was not as serious as it could have been," Puerto Rico
Governor Luis Fortuno told CNN.

Tropical Storm Fiona followed in Earl's wake on a similar
path, though farther east.

At 5 p.m. EDT, Fiona was 270 miles east
of the Caribbean Leeward Islands on a course that was expected
to take it northeast of those islands Wednesday. Most
forecast models kept Fiona far away from the Gulf of Mexico.

With sustained winds of 40 mph, Fiona was just
barely a tropical storm and the much more powerful Earl was
hindering Fiona's development. Earl churned up the seas and
brought cold water to the surface, starving Fiona of the warm
water needed for rapid strengthening.

The storms were far apart but Fiona was moving much faster.
If Fiona closes the gap, high-level winds spiraling from the
top of Earl could shear off and weaken Fiona, the hurricane
center's Baxter said.

"If it gets really close, Earl could actually chew it up
and just kind of kill it," he said.

Elsewhere in the Atlantic, a broad area of low pressure
about 425 miles southwest of the Cape Verde Islands in
the eastern Atlantic had only a 10 percent chance of becoming a
tropical cyclone within 48 hours, the hurricane center said.

Early computer models showed that system moving mostly west
in the Atlantic but toward South America.
(Additional reporting by Gene Cherry in Raleigh, Tom Brown,
Kevin Gray and Pascal Fletcher in Miami and Eileen Moustakis in
New York; editing by Pascal Fletcher and Jackie Frank)