UPDATE 1-New Orleans dead remembered on Katrina anniversary

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By Jeff Franks and Russell McCulley

NEW ORLEANS, Aug 29 (Reuters) - New Orleans rang bells and threw wreaths of remembrance into its waterways on Wednesday to mark the second anniversary of Hurricane Katrina, the powerful storm that devastated the historic city and killed more than 1,400 people.

Memorial events took place across the U.S. Gulf Coast where Katrina came ashore on Aug. 29, 2005 and caused an estimated $80 billion in damage in the costliest U.S. natural disaster.

New Orleans Mayor Ray Nagin choked with emotion at a groundbreaking ceremony for a memorial to the Katrina dead.

He and Army Gen. Russel Honore, who ran the Katrina military relief effort, rang bells, as did many of the 200 people attending the ceremony, at 9:38 a.m., the moment Katrina's massive storm surge broke through levees and flooded the low-lying city.

"We move on and we fight for the existence of this city," Nagin said. "And as we recover, we're never ever, ever going to forget those who lost their lives."

"We ring the bells for hope that the promise that was made in Jackson Square will become a reality and restore confidence in government at all levels," he said in an apparent dig at President George W. Bush, who was in town with first lady Laura Bush to mark the anniversary.

Bush famously made a nationally televised speech from Jackson Square in the French Quarter promising federal aid after days of chaos in the flooded city.

Many feel he did not deliver because New Orleans still has only 60 percent of its pre-storm population and thousands of homes and buildings sit damaged and deserted.

Across the Gulf Coast, nearly 62,000 families, some of them victims of Hurricane Rita which struck Louisiana and Texas three weeks after Katrina, still live in government-provided trailers, the Federal Emergency Management Agency said.

Bush, in remarks at a newly reopened school in the Lower Ninth Ward, the impoverished neighborhood that was wiped out by the storm, defended the government's performance.

He said $114 billion in federal money had been allocated to the storm-stricken area and New Orleans looked much better than it did on his previous visits.

"This town is coming back, this town is better today than it was yesterday and it's going to be better tomorrow than it was today," Bush said.

"It's one thing to come give a speech in Jackson Square, it's another to keep paying attention whether or not progress is being made. And I hope people understand we do, we're still paying attention," he said.

He went on to neighboring Mississippi, whose coastal towns were badly damaged by Katrina and are still recovering.