Tropical Storm Earl forecast to become hurricane

Hurricane Danielle, shown located southeast of Bermuda, and Tropical Storm Earl, shown located west of the Cape Verde Islands, in a satellite image taken August 26, 2010.

MIAMI (Reuters) - Tropical Storm Earl threatened on Saturday to become the next hurricane to form over the Atlantic Ocean as Hurricane Danielle weakened to a Category 2 storm, the U.S. National Hurricane Center said.

Earl is heading toward the Northern Leeward Islands and is forecast to become a hurricane on Sunday, the Miami-based hurricane center said.

The storm packed sustained winds of 60 miles per hour and triggered tropical storm warnings across several Caribbean nations and territories. It was located some 600 miles southeast of the Northern Leeward Islands.

Danielle weakened to a Category 2 storm earlier on Saturday and was forecast to pass well east of Bermuda, where officials canceled a tropical storm warning.

Still, the hurricane center said dangerous surf conditions would affect Bermuda, a British island territory and a center for the global insurance industry, over the next few days.

Bermuda residents said they were now watching out for Earl.

"It looks like we dodged a bullet," 31-year-old bank employee Stuart Roberts said of Danielle. "We are keeping an eye on Earl though."

Danielle was also expected to cause swells and dangerous rip currents on the U.S. East Coast over the weekend. The storm is forecast to weaken gradually beginning on Sunday.

Earl has prompted tropical storm warnings in Antigua and Barbuda, St. Kitts and the British overseas territory of Montserrat.

(Reporting by Sandra Maler in Washington and Sam Strangeways in Bermuda; Writing by Kevin Gray; Editing by Peter Cooney)