(Updates with U.S. hurricane center's latest advisory)

HAMILTON, July 13 (Reuters) - Hurricane Bertha weakened back into a less-menacing tropical storm on Sunday after stalling near the British colony of Bermuda, the U.S. National Hurricane Center said.

The top sustained winds of what had been the first hurricane of the 2008 Atlantic storm season slipped to near 65 miles per hour (100 km per hour), below the 74 mph (119 kph) threshold at which tropical storms are classified as hurricanes, the Miami-based hurricane center said.

Little change in strength was expected over the next 24 hours and the storm, which showed little if any forward movement after spinning in circles on Sunday, was expected to start moving gradually northward Sunday night.

"The center of Bertha is expected to slowly pass not far to the southeast and east of Bermuda during the next day or so," the hurricane center said.

"One way or another it appears that Bertha could be with us for several more days," it said.

At one point a "major" Category 3 hurricane on the five-step Saffir-Simpson scale, Bertha weakened as it churned up colder waters from beneath the sea surface, depriving it of the warm water that fuels tropical storms.

Bermuda, a major tourist resort and financial center, has strict building codes. A tropical storm is unlikely to pose any significant threat to its 66,000 people.

Many islanders said they were looking forward to the arrival of Bertha, as it would bring some much-needed rain after a long drought.

Oil markets had kept a wary eye on Bertha but the Gulf of Mexico with its oil rigs has not been in its track for days.

By 5 p.m. EDT (2100 GMT), Bertha was around 175 miles (285 km) southeast of Bermuda.

Bertha formed near the Cape Verde Islands off Africa and its development that far east so early in the hurricane season is viewed by some experts as ominous. Storm activity does not usually get into high gear in the Atlantic until August. (Reporting by Michael Christie and Matthew Taylor; Editing by Tom Brown and Alan Elsner)

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