* Hurricane Jimena weakens to Category 2 storm

* Storm drenches, buffets upscale Los Cabos resort

* Tourists take shelter in boarded-up hotels

By Jason Lange

LOS CABOS, Mexico, Sept 2 (Reuters) - Hurricane Jimena weakened on Wednesday after slamming Mexico's Baja California peninsula with howling winds and drenching the Los Cabos resort area where tourists took refuge in boarded-up hotels.

The storm's force eased as it neared land but the U.S. National Hurricane Center said a hurricane warning remained in effect and that "preparations to protect life and property should be rushed to completion."

The center said Jimena was now a Category 2 storm with winds of 110 mph (175 kph) and stronger gusts, after it dropped from an extremely dangerous Category 4 and then to Category 3.

Sheets of rain poured from dark gray skies as Jimena's winds buffeted the tip of the peninsula, home to world-class golf courses, yachting marinas and five-star hotels.

"We were tourists, now we're just stuck here," said Karl Weber, 40, of Birmingham, Alabama, as he peeked out at the storm from his hotel's hallway. He and his wife had been diving up the coast in Cabo Pulmo and their flight home was canceled.

The resort appeared to have avoided the worst of the storm, which was projected to make landfall in a sparsely populated area farther north early on Wednesday.

Jimena was about 110 miles (175 km) south-southeast of Cabo San Lazaro and moving north-northwest at 13 mph (20 kph).

Mexico has no oil installations or significant coffee or mining interests in the area. Cabo San Lucas port was closed.

An Organization of Economic Cooperation and Development meeting of officials from dozens of countries to discuss tax havens had to be moved from Los Cabos to Mexico City.

There were no immediate reports of damage to property, said Jose Gajon, the head of civil protection in Baja California Sur state.

Earlier, staff at swanky hotels nailed boards over windows, wrapped exposed furniture with plastic and turned conference rooms into storm shelters with camp bedding and board games.

A beachfront hotel at Cabo San Lucas tied a fountain statue of the sea god Neptune to palm trees and anchored a lobby chandelier to the ground with ropes to stop them blowing away.

TORRENTIAL RAIN

Poor families, hotel workers and builders huddled in shelters in schools after 5,000 people were evacuated.

Torrential rain flooded main roads, turned streets in one shanty town into muddy rivers and caused a sewage system in the town of San Jose del Cabo to overflow.

"I've never experienced anything remotely like this," said real estate investor Reg Wilson, 36, from Orange County, California. "I have no idea what to expect. We don't have a lot of options so we just have to ride this out."

Jimena came close to becoming a Category 5 storm -- the top of the Saffir-Simpson scale and potentially devastating -- but weakened as it approached land.

Sheltering in a school, Mexicans from a slum just north of Los Cabos fretted that their flimsy homes could blow away or sink into mud.

"People are really worried," said Ilda Ramirez, 33, who lives in a shack made from cardboard and scrap materials. "I know we could end up losing everything."

Much of Baja California is desert and mountains that are popular with nature lovers, surfers, sport fishermen and retirees. Los Cabos, normally bathed in brilliant sun from dawn to dusk, attracts planeloads of tourists all year round.

"We did a last-minute booking and ended up getting a hurricane," said tourist Cathy Hallock, 60, from California.

Many residents of shanty towns refused to leave, despite city buses waiting to take them to emergency shelters.

Yachts, water taxis and glass-bottomed boats had been removed from the water at the port of Cabo San Lucas.

Colleen Johnson, 55, who just moved to the area from Canada, stocked up on water, batteries and canned food.

"We're a little leery but I think we are doing everything right," she said at a store that had run out of rain ponchos.

Jimena is the second hurricane of the 2009 eastern Pacific season to pound Mexico. Hurricane Andres swept a fisherman to his death in Acapulco in June. (Additional reporting by Susy Buchanan in Los Cabos; writing by Catherine Bremer; Editing by John O'Callaghan)

AlertNet news is provided by