Hurricane Gustav has hit a deserted US Gulf coast but delivered only a glancing blow to New Orleans before weakening and heading inland.

Around two million people fled the state of Louisiana over the weekend as the hurricane prompted fears of death and destruction on a similar scale to that caused by Katrina three years ago.

But "the storm of the century" lost much of its power as it landed south west of New Orleans, which resembled a virtual ghost town, and the city's levees which failed during Katrina appeared to be holding.

City mayor Ray Nagin urged everyone to "resist the temptation to say we're out of the woods".

He said Gustav's heavy rainfall could still flood the saucer-shaped city over the next 24 hours as tropical storm-force winds batter the region.

But even as fears started to fade over Gustav, another hurricane, Hanna, was strengthening about 40 miles north of the Bahamas and could come ashore in Georgia and South Carolina later in the week.

The extent of the damage was not immediately known. It is possible that damage to refineries and drilling platforms could cause fuel prices to spike.

Torrential downpours swept across the US Gulf coast with winds of around 110mph as Gustav smashed into the heart of Louisiana's fishing and oil industry as a Category 2 storm.

It made landfall near Cocodrie, a low-lying community in Louisiana's Cajun country 72 miles south-west of New Orleans, at around 9.30am local time, the US National Hurricane Centre said.

Forecasters once feared it would arrive as a devastating Category 4 hurricane, with much more powerful winds.

A total of seven storm-related deaths were reported, but all were traffic deaths. They included a woman killed in Louisiana in a car crash driving from Baton Rouge to New Orleans and four people killed in Georgia when their car struck a tree.

Before hitting the US, Gustav was blamed for more than 90 deaths as it wreaked havoc across the Caribbean.

Three years ago, Katrina killed more than 1,800 people after it hit the Gulf coast with an epic storm surge that topped 27ft, a far higher wall of water than Gustav hauled ashore.

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