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By Samantha Strangeways

HAMILTON Bermuda (Reuters) - Tropical Storm Fay lost strength after briefly reaching a Category 1 hurricane in the Atlantic on Sunday, sweeping past Bermuda with strong winds, felling trees and knocking out power to thousands in the British territory.

The U.S. National Hurricane Center said on Sunday evening that Fay carried top sustained winds of 65 miles per hour (100 km per hour). Fay was about 400 miles (645 km) east northeast of Bermuda and moving in an easterly direction.

A Category 1 storm is at the low end of the five-stage Saffir-Simpson scale of intensity.

Fay knocked power out for at least 18,000 homes in Bermuda in the early hours of Sunday, officials said. Crews worked through the night to restore electricity after severe winds brought down power lines. Trees were also uprooted, including at Government House, where the British governor resides, and road signs were brought down.

Bermuda has strict building codes and is well prepared for storms that sweep across the Atlantic during the June-through-November hurricane season.

An affluent island and global reinsurance center, located 640 miles (1,030 km) off Cape Hatteras, North Carolina, Bermuda is home to some 65,000 people.

It was largely business as usual in the capital, Hamilton, with restaurants open and some traffic lights in operation on Sunday afternoon.Bermuda s Emergency Measures Organization met on Sunday to assess the damage.

We are aware of some damage to property and of downed trees and power lines, acting Premier Trevor Moniz said before the meeting. The safest thing is for people to remain at home and allow the important work that follows this kind of storm to be done safely and by the responsible agencies.”So far, the 2014 Atlantic hurricane season has been relatively inactive and Fay was only the sixth named storm of the year. In August, forecasters downgraded their outlook for the season, predicting below-normal activity with seven to 12 named storms, and no more than two reaching major hurricane status.

A major hurricane is considered to be Category 3 or above with winds hitting at least 111 mph (178 kph).

Below-average temperatures in the tropical Atlantic Ocean are making it difficult for larger storms to develop, the forecasters say.

Fay s formation came just over a month later than the typical date for the season s sixth named storm, according to Jeff Masters, a hurricane expert with private forecaster Weather Underground.

Earlier on Sunday, Tropical Storm Gonzalo formed in the Atlantic Ocean, east of the Caribbean Islands and was forecast to become a hurricane by the time it reaches Puerto Rico on Tuesday, the hurricane center said.

(Reporting by Samantha Strangeways in Hamilton, Bermuda, David Adams in Miami and Peter Cooney in Washington; Editing by David Evans and Lisa Shumaker)

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