Hurricane Karl forms in the Gulf of Mexico (AP)

MIAMI � Karl has become a hurricane in the Gulf of Mexico after dumping heavy rains on the Yucatan Peninsula as a tropical storm.

A hurricane warning was issued Thursday for Mexico's coast from Palma Sola to Cabo Rojo. Also, a tropical storm warning has been issued for the coast for north of Cabo Rojo to La Cruz and for the area south of Palma Sola to Veracruz.

Karl's maximum sustained winds are near 75 mph (120 kph). The National Hurricane Center in Miami says additional strengthening is possible and Karl could approach major hurricane strength before reaching Mexico's coast.

Karl is located about 310 miles (500 kilometers) east-southeast of Tuxpan, Mexico, and is moving west near 12 mph (19 kph).

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

CANCUN, Mexico (AP) � Tropical Storm Karl re-entered the Gulf of Mexico and strengthened again Thursday after dumping heavy rains on the Yucatan Peninsula, threatening to build into a Category 2 hurricane and hit near a port and an oil hub on the Mexican Gulf coast.

Karl could make landfall by late Friday with winds of as much as 100 mph (160 kph) near the oil hub of Poza Rica, according to the U.S. National Hurricane Center in Miami, Florida.

The storm had weakened as it moved over the Yucatan, downing tree limbs and causing power outages, but once over the Gulf water its winds built back up to about 65 mph (100 kph), and it was expected to quickly reach hurricane strength.

By early Thursday, Karl was about 110 miles (180 kms) off the Yucatan peninsula, about 350 miles (560 kms) east of Tuxpan. But it was heading west at a rapid clip of about 9 mph (15 kph).

Poza Rica, while slightly inland, houses important pipelines, and gas and oil-processing plants operated by the state-owned oil company Petroleos Mexicanos, or Pemex. The company said it had no immediate plans to halt production at the plants because of the oncoming storm.

Tuxpan is an old port city of about 135,000 located on a river near the coast.

In the Atlantic, Hurricane Igor spun into a dangerous Category 4 storm that could generate dangerous rip currents along the U.S. East Coast over the weekend and bring large swells to the Bahamas and Virgin Islands before that. Category 2 Hurricane Julia was not a threat to land.

In Mexico, the government issued a hurricane watch for its eastern Gulf Coast from La Cruz in the northern state of Tamaulipas south to a point just north of the city of Veracruz.

On Wednesday, Karl made landfall on the Mexican Caribbean coast about midway between the cruise ship port of Majahual and the coastal town of Xcalak.

Violeta Pineda, who has operated thatched-roof bungalows known as the Hotel Kabah Na for 13 years, said waves were rolling about 25 yards (meters) onto the beach and eating away at a stretch of road that runs along the coast.

"There is a lot of wind," said Pineda, whose hotel is about 5 miles (8 kilometers) south of Majahual.

Electricity went out briefly around Majahual. But the town took an almost-direct hit from Category 5 Hurricane Dean in 2007 � the third most powerful Atlantic hurricane ever to hit land � and "this is nothing in comparison," said Pineda.

Karl's center passed close to Chetumal, the capital of Quintana Roo state.

Chetumal suffered minor flooding and the storm knocked down tree limbs, downing power cables and cutting power to some areas of the city, said Damaris Victoriano Rascon, an employee of the city civil defense office. She said there were no reports of injuries in the storm.

On the other side of the Atlantic, Julia briefly intensified into a powerful Category 4 storm Wednesday before weakening to a Category 2 storm early Thursday with maximum sustained winds near 105 mph (165 kph). Hurricane Igor's top winds increased Thursday to near 145 mph (230 kph).

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Associated Press Writer Mark Stevenson in Mexico City contributed to this report.

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