* Category 4 Earl threatens North Carolina's Outer Banks
* Hurricane watch issued for most of North Carolina coast
* Direct full hit to U.S. shoreline is not forecast so far
* But any westward shift could prompt evacuations (Updates with latest storm locations, hurricane watch area expanded)
By Jane Sutton
MIAMI, Aug 31 (Reuters) - Powerful Hurricane Earl churned toward the eastern U.S. seaboard on Tuesday and looked to sideswipe the densely populated coast from North Carolina to New England, the U.S. National Hurricane Center said.
Forecasters expected the main core of the Category 4 hurricane to stay offshore as Earl moved parallel to the coast during the upcoming Labor Day holiday weekend that traditionally marks the end of summer.
A hurricane watch was issued for most of the North Carolina coastline as officials warned any westward deviation from the forecast track could prompt coastal evacuations or even bring the storm ashore.
"A small error of 100 miles (160 km) in the wrong direction could be a huge impact difference," National Hurricane Center Director Bill Read told a conference call with journalists.
"Even a minor shift back to the west could bring impacts to portions of the coastline from the mid-Atlantic northwards."
The hurricane watch, issued by the Miami-based hurricane center, alerts residents that hurricane conditions -- sustained winds of 74 mph (119 kph) -- are possible within 48 hours. It covered the North Carolina coastline up from Surf City to the state's border with Virginia, including the Pamlico and Albemarle Sounds.
Earl, the second major hurricane of the 2010 Atlantic season, was moving west-northwest in the open Atlantic on Tuesday, keeping well east of the Turks and Caicos Islands.
At 8 p.m. (0000 GMT), it was centered about 835 miles (1,545 km) south-southeast of Cape Hatteras, North Carolina.
Earl was forecast to clip the barrier islands of North Carolina's Outer Banks on Thursday night and bring drenching rain, rough seas, pounding surf and gusting wind to the Atlantic Coast from North Carolina to New England and Atlantic Canada.
Evacuations were ordered, or expected, for Wednesday for the most vulnerable spots on the Outer Banks, including the Cape Lookout National Seashore and Ocracoke Island, which has about 800 year-round residents and is accessible only by boat. It is one of the barrier islands where the pirate Blackbeard once roamed.
Earl had top sustained winds of 135 miles per hour (215 kph), making it a Category 4 storm on the five-step Saffir-Simpson intensity scale. It was expected to stay just shy of a maximum Category 5.
SOME UNCERTAINTY OVER FINAL PATH
It was too early to predict how close the hurricane would come to New York when it churned offshore east of the city during the weekend.
"We're just telling everybody to keep their eyes on the track and just keep checking back," hurricane center meteorologist Barry Baxter said.
The hurricane center said Earl's forecast track in the coming days shifted slightly to the west, which could bring its outer fringes closer to the U.S. coast.
U.S. and Canadian East Coast oil refiners said they were monitoring Earl but that it was too early to begin to take any precautionary measures. [ID:nN31257805]
Hurricane Earl posed no threat to major U.S. oil and gas installations in the Gulf of Mexico.
Tropical storm warnings and watches were in effect for the Turks and Caicos, where flights were suspended, and for the sparsely populated southeast Bahamas.
On Monday, Earl battered the northeastern Caribbean islands and Puerto Rico, downing power lines, blowing off roofs, toppling trees and causing some flooding. There were no immediate reports of casualties.
"We have been quite fortunate. We did not take a direct hit ... it was not as serious as it could have been," Puerto Rico Governor Luis Fortuno told CNN.
Tropical Storm Fiona followed in Earl's wake on a similar path, though farther east.
At 8 p.m. (0000 GMT), Fiona was 300 miles (485 km) east-southeast of the Caribbean Leeward Islands on a course that was expected to take it northeast of those islands on Wednesday. Most forecast models kept Fiona far away from the Gulf of Mexico.
With sustained winds of 40 mph (65 kph), Fiona was just barely a tropical storm and the much more powerful Earl was hindering Fiona's development. Earl churned up the seas and brought cold water to the surface, starving Fiona of the warm water needed for rapid strengthening.
The storms were far apart but Fiona was moving much faster. If Fiona closes the gap, high-level winds spiraling from the top of Earl could shear off and weaken Fiona, the hurricane center's Baxter said.
"If it gets really close, Earl could actually chew it up and just kind of kill it," he said.
Elsewhere in the Atlantic, a broad area of low pressure about 525 miles (845 km) southwest of the Cape Verde Islands in the eastern Atlantic had only a 20 percent chance of becoming a tropical cyclone within 48 hours, the hurricane center said.
Early computer models showed that system moving mostly west in the Atlantic but toward South America. (For more information about hurricanes and weather models, see: www.nhc.noaa.gov/ and www.skeetobiteweather.com/) (For more on the 2010 hurricane season, click on [nN2005]) (Additional reporting by Gene Cherry in Raleigh, Tom Brown, Kevin Gray and Pascal Fletcher in Miami and Eileen Moustakis in New York; editing by Pascal Fletcher and Mohammad Zargham)