(Updates with increase to Category Two status and new position)
By Chris Keane
HATTERAS ISLAND, N.C., July 3 (Reuters) - The first hurricane of the Atlantic season gained strength on Thursday as it spun closer to the North Carolina coast, bringing the anticipated stiff wind gusts and heavy rain that forced thousands of vacationers to scrap their July Fourth holiday plans amid evacuation orders.
Hurricane Arthur was about 110 miles (165 km) southwest of Cape Hatteras, North Carolina, with maximum sustained winds of 100 miles per hour (160 km per hour), earning it Category 2 status on the five-step Saffir-Simpson scale of hurricane intensity, U.S. forecasters said.
Moving at 15 mph (24 kph), the center of the storm shifted slightly west on Thursday afternoon and was expected to pass over the North Carolina Outer Banks late Thursday, according to the National Hurricane Center in Miami.
The shift in the track would bring the strongest winds inland over eastern North Carolina, affecting some coastal towns such as Morehead City, as well as the U.S. Marine Corps base at Camp Lejeune.
Officials at Seymour Johnson Air Force Base near Goldsboro said they moved more than 50 jets to Ohio before the storm to avoid potential wind damage.
Arthur would be the first hurricane to hit the United States since Superstorm Sandy devastated New York and New Jersey in October 2012 and caused $70 billion estimated damage.
Despite growing in intensity, Arthur remained a medium-sized storm, with hurricane force winds only extending outward up to 35 miles (55 km) from the center, though lesser tropical storm-force winds extended 150 miles (240 km).
After scything through the Outer Banks, Arthur should accelerate toward the northeast over cooler water on Friday, diminishing in strength and posing little risk to the northeastern United States, forecasters said.
The storm disrupted plans for holiday beachgoers and others ordered off low-lying barrier islands in its path. Tourists and some residents packed ferries and crowded the only highway off Ocracoke and Hatteras islands, where voluntary and mandatory evacuations were in effect.
Ferry service between some islands was suspended on Thursday afternoon as conditions began to deteriorate, with heavy rain and wind gusts reported along the coast.
Some people on Hatteras Island planned to ride out the storm. Retiree Gerry Lebing said he was tying things down at his house and moving cars to higher ground.
Troy Scroggin drove from Virginia to check on his vacation home on Hatteras Island. "We had to batten down the hatches and we're going to stay and see what's it's like," he said.
The storm could bring life-threatening rip currents and a storm surge of up to 5 feet (1.5 meters) to North Carolina's barrier islands, forecasters said.
'DON'T PUT YOUR STUPID HAT ON'
North Carolina officials warned the storm surge could make the narrow 50-mile (80 km) Highway 12 connecting Hatteras Island to the mainland impassable. The state was putting extra heavy equipment in place to remove sand and the overwash as soon as possible after the storm passes.
Part of the highway was washed out by storm surge for two months after Sandy, forcing people to use ferries to reach the mainland.
"I think it's probably going to get knocked out again," said Jeff Masters, a hurricane expert with private forecaster Weather Underground.
Officials asked residents to stay out of rough waters and avoid driving through high water.
"Don't put your stupid hat on," North Carolina Governor Pat McCrory said at a news conference.
State officials said 105 National Guard members have been deployed to help with storm preparation and safety, and 400 state troopers are helping with the evacuation efforts.
Several towns and villages on North Carolina's coast rescheduled Independence Day festivities and fireworks as the storm approached.
Farther north, the beach resort of Ocean City, Maryland, and more than a dozen communities in New Hampshire and Connecticut moved their July Fourth fireworks display to Saturday.
Despite losing strength on Friday, Arthur would likely bring heavy rain to Boston and strong winds over Cape Cod and Nantucket. It would still be near hurricane strength when it passes over Nova Scotia on Saturday, according to Masters. (Additional reporting by Gene Cherry in Raleigh, David Adams in Miami, Ted Siefer in New Hampshire and Richard Weizel in Connecticut; Writing by Colleen Jenkins and David Adams; Editing by Doina Chiacu and Jim Loney)