Flooding feared along U.S.-Mexico border from Dolly

BROWNSVILLE, Texas (Reuters) - Hurricane Dolly, which lashed the U.S.-Mexico coastline, weakened to a tropical depression on Thursday over South Texas, but concern remained over flooding along the populous Rio Grande Valley.

Initial reports indicated that aging levees holding back the Rio Grande River withstood a surge from Dolly, which dumped up to 12 inches of rain in the first hours after coming ashore at the barrier island of South Padre Island on Wednesday and spurred widespread flooding across South Texas and northeast Mexico.

The full effect of the flooding might not be seen for days as rain flows into the region where more than 1 million people live.

Local officials said the levees have held under the strain, though flooding was widespread.

"They held up fine," said Johnny Cavazos, emergency management coordinator for Cameron County, which borders Mexico and the mouth of the Rio Grande. "I don't see this being a problem as Dolly moves inland."

Dolly, the first hurricane of the 2008 Atlantic storm season, left about 245,000 homes in the valley without power as of Thursday afternoon, according to the state's grid operator.

Dolly came ashore on Wednesday as a Category 2 hurricane, the second level on the five-step Saffir-Simpson scale with maximum sustained winds of 100 mph (160 kmh), but steadily lost strength as it moved inland.

At 5 p.m. EDT the storm was 35 miles south of Eagle Pass, Texas, with maximum sustained winds near 35 mph (55 kmh), the National Hurricane Center said.

The Miami-based forecasters said it could produce total rainfall of up to 20 inches in some places. "These rains are very likely to cause widespread flooding," it said.

DISASTER AREAS

Texas Gov. Rick Perry has put 1,200 National Guard troops on alert in case they are needed to help cope with the storm's aftermath.

There were no reports that levees along the Rio Grande had been breached.

The Bush administration declared 15 of the Texas counties hit hardest by the storm as disaster areas, allowing them to draw on federal funds for cleanup and rebuilding.

In South Padre Island, residents emerged from their homes and shelters to walk through streets littered with debris, toppled street lights and downed power poles.

"Everything is gone. Everything got wet," said Amber Acevado, who runs a flooring store on the island. "You stand here inside the store, you can see right through to the outside."

Many residents and tourists trapped on the island by the storm left after a causeway to the mainland reopened.

Offshore drilling rigs and production platforms in the Gulf of Mexico emerged from the storm mostly unscathed.

U.S. crude oil prices rose earlier this week on worries of possible storm damage to offshore drilling rigs. But oil prices fell after the storm barely dented supplies, hitting a 7-week low of $123.50 a barrel on Thursday.

In Mexico, Dolly flooded towns along the northeast coast up to waist level, and a man was killed in the border city of Matamoros when power cables fell into floodwater and electrocuted him, local authorities said.

Mexico's navy on Wednesday recovered the body of a fisherman who had vanished off the Yucatan Peninsula as the storm passed through.

In South Padre Island, a 17-year-old boy was seriously injured when he fell seven stories from a condominium balcony during the storm.

(Additional reporting by Jim Forsyth in San Antonio, Tomas Bravo in Playa Bagdad, Mexico, Jose Cortazar in Cancun, Mexico and Catherine Bremer in Mexico City; Writing by Chris Baltimore; Editing by Xavier Briand)

(For latest U.S. National Hurricane Center reports, see www.nhc.noaa.gov/ )