Although its track was uncertain, it could affect millions of people in some of the most heavily populated areas of the Eastern Seaboard including Richmond, Virginia, Washington, D.C., Baltimore, Philadelphia and parts of New Jersey.

Residents of North Carolina's Outer Banks, an island chain more than 100 miles long and home to 55,000 permanent residents, began hurricane preparations yesterday.

Ocracoke Island, a tiny barrier island southwest of Cape Hatteras and reachable only by boat or plane, was under a mandatory evacuation order.

"We are urging people to go as soon as they can," David Styron, emergency management coordinator for the island, said. "The ferries are running as hard as they can and will run as long as they can."

So menacing is the storm that Virginia Gov. Mark Warner yesterday declared a state of emergency, even though it won't strike until later in the week.

The last big storm to hit North Carolina was Floyd, which caused massive flooding in 1999. Although only a Category 2 storm when it hit, Floyd had been stronger before reaching land and ended up killing 56 people and causing $4.5 billion in damage, the third costliest hurricane in U.S. history.

NAVY MAY MOVE SHIPS TO SEA

The possible economic impact of the storm was already sending tremors through the markets yesterday. Shares of insurance companies led stock market losses, but some home improvement stores saw their stocks rise.

"We're seeing some pretty good spikes" in sales of batteries, flashlights, generators, plywood, bottled water, plastic sheeting and duct tape, with "a very large run in North Carolina," said Paula Erickson, a spokeswoman for building materials seller Ace Hardware.

Energy traders were concerned that nuclear power plants in the Southeast would need to ramp down or close due to the storm. If Isabel hits New Jersey, Pennsylvania and Delaware, 10 oil refineries would be vulnerable.

The Navy and Air Force watched the storm closely but had made no decision to move aircraft or take about 70 ships out to sea rather than risk slamming against docks.

"Typically, the ships will move out to sea away from the hurricane, circle around the back side and then come in behind it," said Ted Brown, an spokesman at Atlantic Fleet headquarters in Norfolk, Virginia.

The state of emergency in Virginia enables agencies to ramp up preparations even if it requires overtime pay for their employees, according to the governor's spokeswoman, Ellen Qualls.

And in Norfolk, residents lined up outside Goldberg Hardware store at 7:15 a.m. to buy flashlights, batteries, plywood and plastic sheeting. "We've sold out of plywood and now we can't get any more," said Philip Molofsky, one of Goldberg's owners.

At a nearby Target store, the camping gear aisle had been stripped of lanterns, propane and other supplies.

Residents carrying 5-gallon jugs and bigger were lined up outside Water Plus in Norfolk waiting to use the self-service water spigot. The last time a major storm struck, the neighboring city of Portsmouth was without municipal water for a couple of days.

PREPARE TO EVACUATE

The Virginia Department of Emergency Management issued its first Isabel warning and encouraged citizens to prepare to evacuate if necessary.

"If you live in a storm surge zone or an area subject to flooding, you may be advised to evacuate," said Michael Cline, state coordinator for the VDEM. "If your home is not subject to flooding and local officials don't recommend evacuation, you're typically safer in your own home - if you've fortified it against wind damage."