Tropical Storm Arthur rapidly lost strength Saturday as it headed off the far north-eastern US coast towards Canada, causing less damage than feared in the United States.

Arthur, downgraded from a category one hurricane at 0900 GMT, lashed New England and the Canadian provinces of Nova Scotia and Halifax as it marched in a north-easterly direction off the coast of Massachusetts.

On Saturday tens of thousands of people in Nova Scotia and Halifax were without electricity due to the storm, utilities and local media reported.

The Canadian Hurricane Centre said heavy rain caused by the storm was hitting parts of New Brunswick and Southwest Nova Scotia.

There were no immediate reports of storm-related casualties or damage beyond blackouts.

Arthur made landfall on the coast of North Carolina late Thursday as a category two hurricane, on a scale in which five is the highest.

Forecasters had feared that the storm could trigger serious flooding and disrupt the Independence Day weekend along the heavily populated US east coast.

The storm forced some Fourth of July fireworks displays to be postponed and some vacationers to abandon beaches, but in the end the fast-moving system caused minimal damage.

On the forecasted track, Arthur, or the remains of the storm, will strike near western Nova Scotia and head over the Gulf of St. Laurence by late Saturday, the Miami-based National Hurricane Center reported.

"Maximum sustained winds have decreased to near 70 miles (110 kilometers) per hour. Some additional weakening is forecast, and Arthur is expected to become a post-tropical depression later (Saturday)," the NHC said.

The storm, which was moving at near 22 miles (35 kilometers) per hour, "is expected to continue with a decrease in forward speed during the next day or so," the NHC bulletin read.

North Carolina's Governor Pat McCrory reported Friday that other than some flooding, beach erosion and power outages, his state had been spared the storm's worst possible effects.

"North Carolina beaches are open for business," McCrory said, beckoning visitors who might have scuttled travel plans during the holiday weekend -- the most lucrative for his state's flourishing tourist industry.

The Atlantic hurricane season began June 1 and runs through November 30.

The NHC said the first hurricane of the season carried damaging waves and powerful tidal surges, and left behind up to a half-foot (15 centimeters) in rainfall.