Joaquin was downgraded to a Category Two hurricane Sunday as it headed towards Bermuda, where it is expected to dump rain and generate damaging winds as it swirls nearby, forecasters said.

The hurricane's center is expected to pass west of Bermuda in the afternoon and continue past the north of the island nation Sunday night, the US National Hurricane Center said in its latest statement.

Joaquin's outer rainbands were already thrashing the island early Sunday, with dangerous winds forecast to follow, the NHC said.

However, additional weakening is expected over the next 48 hours, as the Category Two storm on the five-point Saffir-Simpson scale continues to decrease, it added.

Joaquin was swirling some 150 miles (240 kilometers) southwest of Bermuda at 1500 GMT, as it traveled northeast at 17 miles (28 kilometers) per hour.

Three to five inches (seven to 13 centimeters) of total rainfall across Bermuda were expected through Sunday night, the NHC said, and significant coastal flooding and life-threatening storm surges were forecast.

The NHC said that swells generated by Joaquin were still affecting the Bahamas, where homes were destroyed and residents were left without power or phone services after the hurricane tore past.

The southeast United States has already been battered by a separate weather system that has caused significant flooding.

That region is also seeing Joaquin-related swells that "are likely to cause life-threatening surf and rip current conditions," the NHC said.

"Even though Joaquin is expected to pass well east of the coast of the United States, a prolonged period of elevated water levels and large waves will affect the mid-Atlantic region," it added.

Joaquin upgraded to Category 4, 'no sign' of missing cargo ship
Miami (AFP) Oct 3, 2015 - Rescue workers on Saturday scoured the waters off the Bahamas for a missing cargo ship with 33 people aboard, as forecasters upgraded Hurricane Joaquin to a Category 4 storm.

Joaquin moved away from the Bahamas, where it destroyed homes, caused flooding and left hundreds without power, and was expected to bypass the United States, whose southeast coast has already been ravaged by heavy flooding.

The hurricane, which was packing 155 mile-per-hour (250-kilometer-per-hour) winds, had become "severe" the US National Hurricane Center said, as it announced Joaquin's ascent up the five-point scale.

Meanwhile rescuers were frantically searching for the El Faro cargo vessel, with which contact was lost early Thursday as the dangerous weather system approached the Bahamas.

There were "still no signs of the vessel or any communication with them, but we are hoping for better weather conditions to be able to do more extensive searching," Coast Guard chief petty officer Ryan Doss told AFP.

En route from Florida to Puerto Rico, the 735-foot (224-meter) cargo ship was reported to be caught in the storm near Crooked Island, which is part of the Bahamas island chain.

It was from there that it sent a satellite notification stating the ship had lost propulsion and had a 15-degree list.

A total of 28 Americans and five Poles were on board, the Coast Guard said.

Rescue workers however sounded an optimistic note Saturday as the storm moved away from the Bahamas, where the government discontinued all hurricane watches and warnings for its islands.

"As the storm moves to the north we can get further into where we believe the ship's last position was," Doss said.

- US 'coastal flooding likely' -

Joaquin has increased its forward speed and its eye should pass west of Bermuda on Sunday, the NHC said in its latest update.

Although Joaquin is now expected to travel far to the east of the United States, "a prolonged period of elevated water levels and large waves will affect the mid-Atlantic region," the NHC said in a statement.

This will cause "significant beach and dune erosion with moderate coastal flooding likely," it added.

Emergencies were already declared along swathes of the US East Coast and residents were evacuated after a powerful rainstorm lashed several states.

The weather system was thought to have been whipped up in part by Hurricane Joaquin.

North and South Carolina were particularly hard-hit, with severe flooding already occurring in downtown Charleston, meteorologist Mike Doll said on the AccuWeather website.

Part of the city's downtown was closed to traffic, city police said on Twitter, while further north in Myrtle Beach, torrents of rain were causing flooding.

Doll predicted rainfall of one to two inches (2.5 to five centimeters) per hour in some areas of the Carolinas.

South Carolina Governor Nikki Haley told drivers to stay off the roads and warned power outages were possible during the weekend.

"We are expecting historic levels of rainfall this weekend," she said in a statement.

North Carolina residents who live by the sea were evacuated to higher ground away from rising waters, according to state emergency services.

And railway company Amtrak suspended traffic in part of its southeast corridor Saturday, halting trains at Richmond, Virginia.

No casualties have yet been reported across the United States.

- 'Gradual weakening' -

Joaquin, located 550 miles southwest of Bermuda, was traveling northeast at 18 miles per hour. It will see "a gradual weakening" beginning later Saturday, the NHC said.

Joaquin was expected to produce up to 25 inches of rain in parts of the central Bahamas, with swells affecting parts of the Bahamas and the southeastern US coast over the next few days, before spreading northward along the US East Coast.

Joaquin is the third hurricane of the 2015 Atlantic season, which began in June and ends in November. Peak activity usually occurs in September.