Wave watchers pose for photographs while taking in the sights near Peggys Cove on Sunday as Hurricane Bill moves through the area. (Tim Krochak/Canadian Press)Hurricane Bill headed for Newfoundland with much less punch Sunday night after knocking out power to thousands of people in Nova Scotia and soaking that province with heavy rain.

At 10:12 p.m. AT, weather forecasters said a weakening Bill —moving northeast between Cape Breton and the French islands of St-Pierre-Miquelon — should make landfall on southeastern Newfoundland as a tropical storm early Monday morning.

The Category 1 storm, moving at 56 kilometres an hour, passed eastern Cape Breton on Sunday evening and is expected to bring 70 km/h winds, gusting to 100 km/h, when it arrives in Newfoundland. The worst will be felt in the Burin Peninsula.

The town of Placentia on the southeast coast of Newfoundland issued a state of emergency Sunday evening because some of the highest tides of the year will occur around midnight — about the time Bill was expected to make landfall, CBC meteorologist Ryan Snodden said.

Officials were so concerned about potential flooding in the town, which is at sea level, they evacuated two nursing homes and a hospital, and urged residents in low-lying areas to move to higher ground, he said. Three evacuation centres were set up in Dunville and Freshwater as a precaution, officials said.

Bill blows into N.S.

Earlier, Hurricane Bill brought high winds, heavy rain and dangerous surf to Nova Scotia as it blew into the region Sunday morning.

Weather conditions deteriorated by the hour, prompting the Canadian Hurricane Centre to urge everyone to stay away from the Atlantic coastline because of the dangerous waves.

"This is not something to be taken lightly," said Peter Bowyer, the centre's program manager.

But many people didn't heed that call. The RCMP said three young men were standing on the rocks at picturesque Peggys Cove just before 6 p.m. when they were swamped by a wave. They managed to avoid being swept away.

A gift shop and a home in the village were badly damaged when the building was moved off of its foundations and land surrounding it washed into the cove.

Jo Beale, whose father owns the Bailiwick store, said this is the third time the shop has been damaged in a storm — proof that the community needs a new breakwater.

"Since [Hurricane] Juan, it's not there at all and so the centre part of Peggys Cove is completely vulnerable to the open ocean," she told CBC News.

Beale said getting a replacement breakwater is too big a task for a small fishing village and her community needs help dealing with the recurring problem.

Earlier, the RCMP closed off the highway into Peggys Cove, as well as the road near Lawrencetown Beach, east of Dartmouth, and Cow Bay Road near the causeway.

Hurricane Bill dumped buckets of rain as its centre travelled south of the province. Yarmouth got 65.2 millimetres of rain, while the Halifax area received about 55 mm, the hurricane centre said.

Police said several cars had gone off the road because of heavy rains and flooding in the Halifax area. Drivers were urged to stay off Highway 101.

The Hurricane Centre said Yarmouth and Lunenburg reported winds of 80 km/h, while Baccaro Point reached 85 km/h. The highest recorded wind in the Halifax region was 87 km/h.

Power outages

By late afternoon, about 40,000 homes and businesses were without electricity. There were outages in Bridgewater, Kentville, Canning, Liverpool, Dartmouth, Halifax, Windsor and St. Margaret's Bay, as well as parts of Cape Breton County.

At 7:25 p.m., Nova Scotia Power said only 270 households were still without power but it was expected to be restored by Monday morning.

Dozens of arrival and departure flights at the Halifax airport were cancelled Sunday and a ferry service between Nova Scotia and Newfoundland was suspended for the day.

Provincial parks in Nova Scotia were shut down and people were advised to stay clear of beaches.

"The waves, they're very pretty to look at but very dangerous," said Barry Manuel of the Halifax Emergency Measures Organization.

Weakening to tropical storm

In Newfoundland, tropical storm watches were in effect for all areas except the Northern Peninsula.

Peter Bowyer, with the Hurricane Centre, said Bill shouldn't be a hurricane when it arrives in Newfoundland, though it could bring winds of 100 km/h and 60 millimetres of rain to the south and east coasts, as well as central Newfoundland.

"We want everybody to be prepared for everything. … Just in case it doesn't weaken and it does come in at full hurricane strength that would mean 120-km/h sustained winds right at the southern portions and the exposed coastlines," Bowyer said.

He said the first signs of the storm would be felt in Port aux Basques.

Rain on P.E.I.

People on Prince Edward Island also braced for the storm, which forced the cancellation of all flights into and out of Charlottetown late Sunday.

With high winds and rainfall of 40 to 50 mm in the forecast, Islanders were taking no chances with the weather. They hauled boats out of the water and secured things around their houses.

By late morning, however, there was still little sign a storm was coming. There was no rain in Charlottetown and winds were blowing at about 20 km/h. Some rain was falling in western parts of the province.

The Canada Games on the Island reached the midpoint Sunday, with no events scheduled. Whitehorse runner Brittany Pearson, on the track practising Sunday morning, said she was looking forward to a storm.

"I'm pretty excited, actually, because there's no such thing as a natural disaster in Whitehorse, so this is going to be a new experience," said Pearson.

Hurricane Bill moved past Bermuda on Saturday, leaving behind sunny skies, debris and flooding, but no casualties. The storm cut power to about 3,700 customers and flooded some roads. All ferry service was cancelled until Sunday.

With files from The Associated Press