Three buildings in Galveston caught light, fanned by the winds |
Hurricane Rita has crashed ashore with a 20ft (6m) storm surge into low-lying areas along the Texas-Louisiana border.
The US National Hurricane Center says the strongest winds made landfall about 0600 GMT (0100 local), and the storm's eye followed about 90 minutes later.
The towns of Sabine Pass in Texas and Cameron in Louisiana took the initial fury of the hurricane.
Winds of up to 120mph (193km/h) were recorded while the storm was expected to dump up to 25in (60cm) of rain.
Rita was downgraded to a category three hurricane, but experts warned the low-lying coast could still be swamped by a storm surge from the sea, driving "large and dangerous battering" waves.
Many of the towns are deserted after people fled as the hurricane approached.
The BBC's Alastair Leithead in Beaumont, Texas, took shelter in his car but found it was being thrown around by fierce winds. When he repaired to his hotel, the glass front caved in, scattering glass around the lobby.
Tree branches and debris were being blown through the streets.
Fire fanned
In Galveston, Texas, some locals who did not follow the order to evacuate gathered in the Poop Deck bar overlooking the Gulf, drinking through the storm.
"Mother Nature must be a Yankee lady," said chef Samantha Gallion. "It's like she's angry at the southern coast."
Texas officials expressed relief that Galveston and Houston would avoid a direct hit after the storm turned east.
"It looks like the Houston and Galveston area has really lucked out," Max Mayfield, director of the centre, said according to Associated Press.
In Louisiana, flood surges have already broken through one of the levees repaired in New Orleans, after Hurricane Katrina hit last month.
But US army engineers said the real damage had been done by the earlier hurricane and there was little in the abandoned city left to lose.
By mid-afternoon on Friday, streets in eastern New Orleans that were all but dry 24 hours before were flooded once more, with the deprived Ninth Ward district under 6ft (1.8m) of water.
However, New Orleans is likely to escape the worst of Rita, with a forecast of tropical storm conditions rather than hurricane winds for the area.
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Satellite image of Hurricane Rita as it made landfall (65K)
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Storm surges from Rita pose a greater threat to the Texan coast where officials warn that the oil and chemical complexes around Port Arthur - known as Energy City - could be flooded out.
In the largely evacuated town of Galveston, a fire erupted in the centre, whipped up by high winds.
The blaze spread across at least three buildings in the historic Strand District of shops, restaurants and clubs.
It is unclear what sparked it but an electrical pole was seen lying on one of the buildings.
On one gridlocked motorway near Dallas, 24 people died in a fire aboard a bus carrying elderly evacuees from Houston on Friday.
It is thought that the deaths on the bus were caused when its brakes caught fire, igniting oxygen canisters on board.