(Updates with downgrade to tropical storm)

By John Marino

SAN JUAN, Oct 16 (Reuters) - Hurricane Omar weakened to a tropical storm in the Atlantic on Thursday night after threading its way through the small islands of the northeastern Caribbean as a powerful storm that caused far less damage than its punch had threatened.

Omar's maximum sustained winds had decreased to 70 miles per hour (112 kph) as it moved northeastward through the Atlantic Ocean, the U.S. National Hurricane Center said in its 11 p.m. (0300 GMT Friday) advisory. The hurricane center forecast additional weakening during the next two days.

The 15th tropical cyclone of a busy Atlantic hurricane season sank boats in harbors and knocked down trees and utility poles on Caribbean islands, according to reports from officials and residents throughout the vulnerable area.

It posed no threat to the United States or any other land area as it raced out over the open waters of the Atlantic.

"It missed all the major land masses. The only land mass that we know it hit was an itsy-bitsy island called Sombrero and that's uninhabited," said senior hurricane specialist Stacy Stewart at the U.S. National Hurricane Center.

"If it was going to go on a track that wouldn't affect anybody or at least not affect anybody significantly, then it absolutely took that track," Stewart said.

Omar formed north of the Dutch island of Curacao on Tuesday, briefly disrupting oil operations in Venezuela and shutting down processing units at a refinery in the U.S. Virgin Islands.

It strengthened into a fierce Category 3 storm on the five-step Saffir-Simpson scale of hurricane intensity and neared the threshold of Category 4 at its peak in the Anegada passage between the Dutch-French island of St. Maarten and the Virgin Islands.

At 11 p.m. , the center of Omar was 505 miles (812 km) northeast of the northern Leeward Islands and about 715 miles (1,150 km) southeast of Bermuda, the Miami-based center said.

BOATS SUNK

Omar sank at least four boats at the Christiansted harbor in St. Croix in the U.S. Virgin Islands. The U.S. Coast Guard said operations at St. Croix's ports were suspended pending damage assessments, but ports in St. Thomas and St. John were open.

The storm toppled trees and power lines across St. Maarten. In the Maho Bay area, it mowed down a row of wooden nightclubs that were popular with visitors, said Paul Boonstra, a Dutchman who runs boat tours.

British Virgin Islands officials reported fallen rocks, debris and broken trees on roads and minor flooding.

"Once again we thank God that the Territory has been spared the impact of a dangerous Category 3 hurricane," Deputy Gov. Inez Archibald said in a statement.

The only land area to really feel strong storm conditions was the eastern end of St. Croix, but sustained winds there did not exceed tropical storm force, the hurricane center said.

In the U.S. territory of Puerto Rico, home to about 4 million people, Omar caused little more than flooding along a handful of small roads.

"This was another bullet we were able to dodge," said Rafael Mojica, of Puerto Rico's National Weather Service.

Processing units at the 500,000 barrel-per-day Hovensa refinery on St. Croix in the U.S. Virgin Islands were shut down ahead of Omar's arrival and the operators were conducting an assessment on Thursday before restarting it, Hess Corp said.

Hovensa is a large supplier of gasoline and heating oil to U.S. East Coast markets.

The 2008 hurricane season, which officially ends on Nov. 30, has been far more active than average.

Of the most serious storms so far, Hurricane Gustav hit near New Orleans, the city devastated by Hurricane Katrina in 2005, and Hurricane Ike struck Houston. Both threatened oil rigs off the U.S. Gulf Coast.

In Haiti, more than 800 people were killed in flooding caused by Fay, Gustav, Hanna and Ike, while Cuba suffered $5 billion in damage after Gustav and Ike tore through it. (Additional reporting by Michael Christie in Miami; Writing by Tom Brown; Editing by Jim Loney and Peter Cooney)

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