Tropical storm Irene lashed New York Sunday, shutting down America's largest city but sparing it serious damage after killing 14 people on the US east coast and flooding many parts of the region.

The eye of the storm -- downgraded from a hurricane but still packing 50-mile-an-hour (85-kilometer-an-hour) winds and driving rain -- passed over the Big Apple mid-morning, as millions went without power along the coast.

Localized flooding occurred in the south and east of Manhattan, with more serious incidents in Brooklyn, where the famed Coney Island amusement park took a battering and outlying beaches were swamped.

There was heavy flooding along the low-lying south shore of Long Island where high tides, rain and ocean surge drove waves right up against expensive beach houses. Floods were also reported far inland after torrential rain.

"I want people to understand that this is not over," US President Barack Obama said in a short statement in the White House Rose Garden.

"I do want to underscore that the impacts of this storm will be felt for some time. And the recovery effort will last for weeks or longer. Power may be out for days in some areas."

At least 14 deaths were blamed on the storm, which first slammed into North Carolina on Saturday with 85-mile-an-hour winds, before turning north up the coast and weakening.

The youngest victim, an 11-year-old boy, died when a tree crashed through his apartment building in Newport News, Virginia.

Strong winds were expected in New York until nightfall Sunday, but the storm -- the first hurricane to hit the Big Apple in a generation -- was weakening as it continued up through Vermont towards Canada.

"The good news is the worst is over and we will soon return to restore and return mode," New York Mayor Michael Bloomberg said.

He announced that 370,000 people ordered to evacuate could now go back home. More than a million evacuees in New Jersey were also starting to return.

The New York Stock Exchange said it was set to reopen as normal Monday morning.

But New York state governor Andrew Cuomo warned there was "significant damage across the state," including "tremendous flooding" in the Catskill Mountains area north of New York City.

City officials warned that commuting into New York could be a nightmare this week with no firm indication of when public transport would be back on track following an unprecedented shut-down just ahead of the hurricane.

"You're going to have a tough commute in the morning," mass transit chairman Jay Walder said.

Walder said buses could start running soon, but subway trains needed extensive testing of lines and equipment.

Air travel chaos sparked by the closing Saturday of John F. Kennedy International Airport, LaGuardia and Newark also looked likely to drag on. Already more than 10,000 flights were cancelled across the eastern United States.

Christopher Ward, executive director of the area's Port Authority, said Sunday there could be "potential beginnings of service late tomorrow afternoon at best" and "hopefully" almost normal service on Tuesday.

Irene also left swaths of territory without power, including one million in New York state, most of them on Long Island, according to Cuomo.

In New Jersey, 650,000 people had lost power supplies, while in the greater Washington area, nearly two million people lost electricity.

Virginia's Governor Bob McDonnell told MSNBC his state had seen the second biggest power outage in its history.

"It's going to be days, perhaps a week, before all the power's restored. We just ask people to be patient," he said.

Some 65 million people live in the urban corridor from Washington north to Boston, and experts have said the damage could run into the tens of billions of dollars.

In Atlantic City, a gambling resort on the New Jersey shore, locals started to put their lives back together, while counting the costs of a weekend shutdown during the high season.

"We were expecting to make good money, but you cannot fight with Mother Nature," said Riaz Rajput as he removed plywood storm screens from the windows of his shop.

On Cape Cod in Massachusetts, waves of up to six feet (1.8 meters) crashed over some coastal roads, but most residents and tourists let out a collective sigh of relief.

"We're having a little bit of a hurricane party," said T.J. Wolnar, who was confident his beachfront home could withstand the high winds.

"It's good the storm isn't as strong as it was going to be."

Hurricanes are rare in the northeastern United States -- the last major hurricane to hit New York was Gloria in 1985.

Meanwhile, the National Hurricane Center reported that a new tropical storm, Jose, had formed and was approaching Bermuda.

earlier related report
Storm emergency not over: Obama
Washington (AFP) Aug 28, 2011 - US President Barack Obama said Sunday the Hurricane Irene recovery effort could go on for days or weeks, but hailed the disaster response operation as an "exemplary" display of good government.

The president, who took pains to show Americans he was in charge of the emergency effort, amid memories of the botched response to Hurricane Katrina in 2005, also remembered the 14 people killed in the storm.

"I want people to understand that this is not over. Response and recovery efforts will be an ongoing operation," Obama said in a short statement in the White House Rose Garden.

"I do want to underscore that the impacts of this storm will be felt for some time. And the recovery effort will last for weeks or longer. Power may be out for days in some areas," Obama said.

The president returned early from his vacation on Friday to deal with the Hurricane Irene response and led top homeland security officials in a massive federal and local operation on Sunday.

"Our thoughts and prayers are with those who've lost loved ones. And those whose lives have been affected by the storm," Obama said.

"You need to know that America will be with you in your hour of need. While the storm has weakened as it moves north, it remains a dangerous storm that continues to produce heavy rains."

Obama, flanked by Homeland Security Secretary Janet Napolitano and Federal Emergency Management Agency chief Craig Fugate, said he remained concerned by significant flooding and widespread power outages.

He also paid tribute to the work of homeland security officials and emergency workers who he said had saved lives and property in recent days.

Obama also made a veiled political point, as he wages a daily battle with Republicans over the reach and size of government, an argument which will underpin the 2012 presidential election campaign.

"This has been an exemplary effort of how good government at every level should be responsive to people's needs, work to keep them safe and protect and promote the nation's prosperity," Obama said.

"I want to thank scientists who provide the information necessary for governors and mayors to make sound decisions, disaster response experts who made sure we were as prepared as possible, to national guard members and first responders who risked their lives to ensure their fellow citizens' safety -- all ordinary Americans who love their country and volunteer to do their part."

Katrina has been a constant subtext to Hurricane Irene and officials in Washington well remember the heavy political price then president George W. Bush paid for the chaotic federal and local response to that monster storm.

Obama could have ill afforded a similar disaster, as he is enduring one of the most testing passages of his presidency and has seen his approval ratings drop to around 40 percent as the economic recovery stumbles.

The eye of Irene, downgraded from a hurricane to a tropical storm but still packing 65-mile-an-hour (105-kilometer-an-hour) winds and driving rain -- passed over New York on Sunday as millions lost power along the coast.

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