GEORGE TOWN - Late-season Hurricane Paloma strengthened into a Category 3 storm as it lashed the Cayman Islands with wind and rain Friday, knocking down trees and signs.

Lights flickered across Grand Cayman, where tourists gathered on balconies and beaches to watch the storm whip up 10-foot (3-meter) waves.

The hurricane's center was expected to pass near Grand Cayman during the night or early Saturday, then gain strength and punch a Cuba already suffering from billions of dollars in damage from two previous hurricanes this season.

Cuban official newspaper Granma, recalling past late-season hurricanes such as a 1932 storm that killed about 3,000 people, said Paloma poses "a potential danger for the island." The storm could strengthen as it heads toward Cuba's midsection, according to the National Hurricane Center in Miami.

The Cayman Islands government asked all hotels to remove guests from the ground and first floors. Nearly 40 people were already staying in the islands' seven shelters.

Water service across Grand Cayman was turned off, and power likely will be cut as the storm nears, hazard management director Barbara Carby said.

"We have asked everybody to come off the streets and to be home and safe right now," she said.

Stranded tourists watched dark clouds gather from their hotels or beachfront restaurants.

"It was a real surprise," said Rick Douglas, a 50-year-old from Toronto who checked weather Web sites before flying to the Caribbean. "It just said there was a tropical depression starting, but I didn't think it would turn into anything serious."

His wife, Susan Douglas, was confident they would be safe as long as they follow orders.

"Grand Cayman has been there and done that, so they are prepared," she said.

Paloma's top winds Friday night were near 115 mph (185 kph), and it was centered about 30 miles (50 kilometers) south of Grand Cayman, heading north at 6 mph (9 kph).

Havana's communist government activated the early stages of its highly organized civil defense system. In central and eastern Cuba, people were advised to stay tuned to state media for news of Paloma's progress and be ready to evacuate.

Paloma was aiming toward the central-eastern city of Camaguey, which was particularly hard-hit by Hurricane Ike in early September.

Ike and Hurricane Gustav, which struck the island in late August, together caused an estimated $9.4 billion in damage. Nearly a third of Cuba's crops were destroyed, causing widespread shortages of fresh produce and prompting authorities to order the planting of vegetable greens and other short-term vegetables.

Forecasters expect Paloma to weaken into a tropical storm over Cuba and then steer south of Florida through the Bahamas and into the Atlantic.

Cayman Islands Gov. Stuart Jack said Friday that a British Royal Navy ship was on the way and would be available to provide humanitarian assistance if needed.

The airport closed Friday morning after extra flights were added to fly out some people late Thursday.