This NOAA satellite image taken Thursday, Aug. 20, 2009 at 1:45 p.m. EDT shows Hurricane Bill at about 1,038 kilometres south of Bermuda. (Weather Underground/Associated Press)

Packing winds of more than 200 kilometres an hour, Hurricane Bill is tracking toward Canada's East Coast as it continues to churn in the Atlantic Ocean.

Bill's eye was about 825 kilometres south of Bermuda, and about 1,570 kilometres southeast of Cape Hatteras, N.C., at 11 p.m. AT on Thursday.

The hurricane is moving northwest at about 30 km/h and is projected to reach Atlantic Canada in three days as a much-weakened storm.

In its first bulletin on Bill, the Canadian Hurricane Centre said Thursday that parts of Atlantic Canada can expect heavy rain and hurricane-force winds Sunday.

While the storm will lose some of its punch, winds are still expected to top 120 km/h by Sunday evening, the centre said.

The projected track of the storm's eye takes Bill within 150 kilometres south of Halifax and over the southern edge of Cape Breton before moving on to Newfoundland on Monday.

Officials with the Halifax Regional Municipality said staff from the municipal Emergency Measures Organization and the provincial Emergency Management Office would meet Friday to plan for possible scenarios.

The Halifax Port Authority said no cruise ships are scheduled to visit Halifax until next Tuesday. Spokesperson Michele Peveril said there are cargo ships headed towards port and those ships' schedules may need to be adjusted.

"We'll be monitoring with them and the container terminals, whether the storm could impact their schedule, whether they need to avoid the storm," Peveril said.

The Halifax region is also in the midst of hosting a major international sailing competition. The 2009 Nautel Laser World Championships began Thursday on St. Margaret's Bay and will continue through the weekend.

Officials with the event said if the weather is unsettled because of Hurricane Bill, competitors will stay on land until it clears.

Environment Canada has said that it is still too soon to predict if the storm will make landfall.

Weakened overnight

Hurricane Bill weakened to a Category 3 storm overnight, but forecasters at the U.S. National Hurricane Center warned that it could very likely regain strength and become a dangerous Category 4 hurricane again by Friday, and then weaken again on Saturday.

Hurricanes are categorized on the Saffir-Simpson scale from one to five, indicating the storm's intensity at a given time.

Large swells caused by the storm will be affecting islands in the northeast Caribbean Sea and the east coast of the United States through Saturday, the hurricane centre said.

The Bermuda Weather Service issued a hurricane watch for Bermuda, the centre said, meaning hurricane conditions are possible within 36 hours. The hurricane is expected to pass over open waters between Bermuda and the east coast of the U.S. early Saturday.

Two other storms of the Atlantic hurricane season, Ana and Claudette, have had little effect on mainland communities.

With files from The Associated Press