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* Record storm surge in Lower Manhattan

* New York subway tunnels flooded

* More than 7 million on East Coast without power

By Anna Louie Sussman and Michael Erman

NEW YORK, Oct 30 (Reuters) – Millions of people across the

eastern United States awoke on Tuesday to scenes of destruction

wrought by monster storm Sandy, which knocked out power to huge

swathes of the nation’s most densely populated region, swamped

New York’s subway system and submerged streets in Manhattan’s

financial district.

At least 15 people were reported killed in the United States

by Sandy, one of the biggest storms to ever hit the country,

which dropped just below hurricane status before making landfall

on Monday night in New Jersey.

The storm interrupted the presidential campaign a week

before Election Day – posing both risks and opportunities for

President Barack Obama as he seeks a second term – and closed

U.S. financial markets for a second day.

More than 1 million people in a dozen states were under

orders to evacuate as the massive system continued its trek

westward. It left behind a trail of damage – homes underwater,

trees toppled and power lines downed – caused by epic flooding

and fierce winds all along the eastern seaboard.

Obama issued federal emergency decrees for New York and New

Jersey, declaring that “major disasters” existed in both states.

One disaster forecasting company predicted economic losses could

ultimately reach $20 billion, only half insured.

“It’s total devastation down there, there are boats in the

street five blocks from the ocean,” said evacuee Peter

Sandomeno, one of the owners of the Broadway Court Motel in

Point Pleasant Beach, New Jersey. “That’s the worst storm I’ve

ever seen, and I’ve been there for 11 years.”

Sandy, which was especially imposing because of its

wide-ranging winds, brought a record storm surge of almost 14

feet (4.2 meters) to downtown Manhattan, well above the previous

record of 10 feet (3 meters) during Hurricane Donna in 1960, the

National Weather Service said.

Water poured into the subway system and tunnels that course

under the city, raising concerns that the world’s financial

capital could be hobbled for days.

“Hitting at high tide, the strongest surge and the strongest

winds all hit at the worst possible time,” said Jeffrey Tongue,

a meteorologist for the weather service in Brookhaven, New York.

Hurricane-force winds as high as 90 miles per hour (145 km

per hour) were recorded, he said.

“Hopefully it’s a once-in-a-lifetime storm,” Tongue said.

Large sections of New York City were without power, and

transportation in the metropolitan area was at a standstill.

“In 108 years our employees have never faced a challenge

like the one that confronts us now,” Metropolitan Transportation

Authority Chairman Joseph Lhota said in a statement.

It could take anywhere from 14 hours to four days to get the

water out of the flooded subway tunnels, the MTA said.

“The damage has been geographically very widespread”

throughout the subway, bus and commuter train system, MTA

spokesman Aaron Donovan said.

MORE THAN 50 HOMES BURN

The unprecedented flooding hampered efforts to fight a

massive fire that destroyed more than 50 homes in Breezy Point,

a private beach community on the Rockaway barrier island in the

New York City borough of Queens, the Fire Department of New York

said.

Two people in New York City reportedly died in the storm – a

man in a house hit by a tree and a woman who stepped into an

electrified puddle of water. Two other people were killed in

suburban Westchester County, north of New York City, and two

others were reported killed on suburban Long Island.

A motor vehicle death in Massachusetts was blamed in part on

the bad weather. Two other people were killed in Maryland in

storm-related incidents, state authorities said, and deaths also

were reported in Connecticut, New Jersey, Pennsylvania and West

Virginia, CNN said.

Toronto police also recorded one death – a woman hit by

flying debris.

Sandy killed 66 people in the Caribbean last week before

pounding U.S. coastal areas.

More than 7 million people in several U.S. states were

without electricity due to the storm, which crashed ashore late

on Monday near the gambling resort of Atlantic City, New Jersey.

With Obama and Republican presidential rival Mitt Romney

keeping campaigning on hold for a second day instead of

launching their final push for votes ahead of the Nov. 6

election, the storm’s onslaught added a new level of uncertainty

to an already tense, tight race for the White House.

Obama, who has made every effort to show himself staying on

top of the storm situation, faces political danger if the

federal government fails to respond well in the storm’s

aftermath, as was the case with predecessor George W. Bush’s

botched handling of Hurricane Katrina in 2005.

But Obama also has a chance to look presidential in a

national crisis.

The federal government in Washington was closed for a second

day on Tuesday, and schools were shut up and down the East

Coast.

The storm was plowing westward over south-central

Pennsylvania, still packing near hurricane-force winds as strong

as 65 miles per hour (105 km per hour), the National Weather

Service said.

Wind gusts, rain and flooding were likely to extend well

into Tuesday, but without the storm’s earlier devastating power,

said AccuWeather meteorologist Jim Dickey.

“Overall, the worst has past,” Dickey said.

The storm’s wind field stretched from North Carolina north

to the Canadian border and from West Virginia to a point in the

Atlantic Ocean halfway to Bermuda, easily one of the largest

ever seen, the National Hurricane Center said.

Heavy snow fell in higher elevations of the Appalachian

Mountains inland.

NEW JERSEY TOWNS FLOODED

Three towns in New Jersey, just west of New York City, were

inundated with up to 5 feet (1.5 metres) of water after a levee

on the nearby Hackensack River was overtopped or breached,

officials said. Rescuers were using boats to aid the marooned

residents of Moonachie, Little Ferry and Carlstadt.

In New York, a crane partially collapsed and dangled

precariously from a 90-story luxury apartment building under

construction in Midtown Manhattan.

Much of the city was deserted, as its subways, buses,

commuter trains, bridges and airports were closed. Power outages

darkened most of downtown Manhattan as well as Westchester

County, affecting more than 650,000 customers, power company

Consolidated Edison said.

“This is the largest storm-related outage in our history,”

said John Miksad, Con Ed’s senior vice president for electric

operations. The previous record was the more than 200,000

customers hit with outages last year during Hurricane Irene, the

utility said.

Neighborhoods along the East and Hudson rivers in Manhattan

were underwater, as were low-lying streets in Battery Park near

Ground Zero, where the World Trade Center once stood.

U.S. stock markets were set to be closed on Tuesday. They

closed on Monday for the first time since the attacks of Sept.

11, 2001.

Most areas in downtown Manhattan were without power on

Monday morning. As the sun rose, most of the water in

Manhattan’s low-lying Battery Park City appeared to have

receded.

A security guard at 7 World Trade Center, Gregory Baldwin,

was catching some rest in his car after laboring overnight

against floodwaters that engulfed a nearby office building.

“The water went inside up to here,” he said, pointing to his

chest. “The water came shooting down from Battery Park with the

gusting wind.”

Power and back-up generators failed at New York University

Hospital, forcing patients to be moved elsewhere for care.

In Lower Manhattan, firefighters used inflatable orange

boats to rescue utility workers stranded for three hours by

rising floodwaters inside a power substation.

One of the Con Ed workers pulled from the floodwater, Angelo

Amato, said he was part of a crew who had offered to work

through the storm.

“This is what happens when you volunteer,” he said.