KILL DEVIL HILLS – A hurricane watch has been issued for all of the N.C. coast and mandatory evacuations ordered for the Outer Banks, as Hurricane Isabel continues churning toward possible landfall Thursday.

Isabel weakened to a Category-2 storm this morning with top winds decreased to 105 mph and further weakening expected today, but forecasters say the storm will grow stronger Wednesday before reaching land.

The hurricane watch, which means hurricane conditions are possible within 36 hours, covers a large area from Little River Inlet, S.C., along the Carolinas border, northward to Chincoteague, Va.

That area includes Wilmington, Morehead City, all of the Outer Banks, Pamlico and Albemarle sounds, and the Norfolk-Virginia Beach area in Virginia.

In addition, a tropical storm watch is in effect along the South Carolina coast, from Little River Inlet southward to South Santee River. Tropical storm conditions mean winds of 35 to 75 mph.

Before the watch had been issued, officials in Currituck and Dare counties moved into action.

Mandatory evacuations have been ordered at noon in both counties. Schools are closing at noon, and courts have been closed for the rest of the week.

A state of emergency is in effect, and the water and wastewater systems in both counties will be shut down later today.

Residents and visitors along the Outer Banks are not waiting. They are boarding up beachfront homes, stocking up on food, water and fuel, and fleeing the coast.

Even if the storm stays offshore from the N.C. coast, forecasters say Isabel will dump high winds, rain and dangerous surf and riptides along the Outer Banks.

“That is a virtual guarantee,” said Eric Blake of the National Hurricane Center. “Even if it missed you by 100 miles, you will still feel its effects.”

Isabel has lost some of its ferocity since last weekend, when its top winds were 160 mph.

Sarah Jamison, a meteorologist at the National Weather Service office in Morehead City, said Tuesday that Isabel’s intensity – not its forecast path – is the biggest question.

She said computer models largely agree that the storm will reach land somewhere between Ocracoke Island and Nags Head, then move across Pamlico Sound.

Jamison said forecasters believe the storm will be moving fast enough to prevent serious flooding, such as occurred during Hurricane Floyd in 1999.

Beven said forecasters are not certain how the storm’s intensity will change between now and landfall. An upper-level westerly wind ate away some of Isabel’s strength overnight, but the westerly wind is expected to abate by late tonight or Wednesday.

Beven said forecasters currently believe Isabel will retain about the same strength until reaching land.

While Isabel has weakened, the hurricane could become particularly damaging for two reasons.

The storm threatens an increasing number of homes along the fast-growing N.C. coastline, and swells from Hurricane Fabian and Tropical Storm Henri earlier this month already have washed away about 30 to 40 feet of dunes on the Outer Banks protecting a line of hotels and condos.

“Our surf’s been so high, it just ate the banks away,” said Outer Banks resident Al Fisher. “What will a hurricane with 20- to 30-foot seas do?”

More than 900 residents were ordered Monday afternoon to begin boarding ferries from Ocracoke Island in Hyde County. The county’s remaining 4,000 residents will be asked to evacuate voluntarily, beginning at noon today. The request becomes mandatory at 5 a.m. Wednesday, but no one will be forced to leave.

“Anybody who wants to stay at their own risk can stay,” Hyde County Manager Don Davenport said. “But there will be no emergency services provided.”

Late Monday, cars streamed north on two-lane N.C. 12, the only road off the Outer Banks, and heavy traffic is expected today and Wednesday as more evacuations are ordered.

“Even with the new bridges, there’s just a lot more traffic when you’re trying to get out of here,” said Neal O’Daniel, who spends winters in Kitty Hawk and planned to head home to Richmond, Va., at 5 a.m. today.

“It was already bad, even 20 years ago, because people always wait until the last minute to leave,” O’Daniel said. “But now everybody thinks they’re a storm expert because they’ve got the Weather Channel.”

Isabel has dropped to a Category-2 storm after being a Category 5 – the strongest ranking on the National Hurricane Center’s Saffir-Simpson scale – last Friday and Saturday. Hurricane Hugo, which pummeled Charlotte in 1989, was a Category-4 storm when it came ashore near Charleston.

Isabel’s path differs from all East Coast hurricanes since records were first kept in 1895. Its track most closely resembles Hurricane Fran, which crashed ashore north of Wilmington in September 1996, then moved across Eastern North Carolina into Virginia.

Current predictions show Isabel headed for the Outer Banks, where residents and vacationers reacted with a mix of caution and enjoyment. Some skeptics planned to wait, spending Monday kayaking, sunbathing and surfing in 9-foot waves that were more than three times higher than usual.

“It’s a little nuts, I know. But how often do you get these conditions?” said Gregg Manley, 24, who came to Kitty Hawk from Chapel Hill with two friends. “It’s like we’re on the West Coast.”

Others, though, braced for the worst.

At Garry Oliver’s Outer Banks Fishing Pier in south Nags Head, trucks will haul away rods, tackle and even pinball machines today, in case the 46-year-old pier is demolished. And officials plan to evacuate Britthaven nursing home this morning, which always has been considered relatively safe because it sits on some of the Outer Banks’ highest ground.

Dan Saar of Kings Mountain said Monday he’s ending his vacation.

“We’ve heard a lot of natives who are leaving, too,” Saar said. “That’s what made us want to go.”

Robert Jenkins planned to stay in Kill Devil Hills. “We’ve been through a bunch of them, and nothing ever hits,” he said.

Still, he was nervous enough to fill his camper with food, supplies and 35 gallons of gasoline Monday and hook his Jeep to the trailer hitch.

Elsewhere in the Carolinas, officials braced for Isabel:

Rescued se turtles were being readied for evacuation.

Charlotte leaders rushed a storm debris removal contract before the City Council.

According to the New York Times, the Navy ordered 40 warships and submarines in Norfolk, Va., put to sea, and the Air Force ordered fighter jets at coastal bases to fly inland.

Environmentalists monitored waste lagoons, fearing they could burst as at least one did following Hurricane Floyd in 1999.

U.S. Airways eased ticket restrictions for passengers at seven airports, from Myrtle Beach north to Maryland.