The so-called ‘Frankenstorm’ left at least one person dead in America's biggest city, while emergency services staged many rescues of people trapped in their homes and in a hospital which lost power.

Seawater burst the banks of the East and Hudson rivers, submerging road and subway tunnels. Power was cut to about 500 000 homes across New York City's five boroughs, including 250 000 in Manhattan.

Gale force winds pushed over a crane on a skyscraper and tore off the facade of another building.

A falling tree killed a man in the Queens borough, firefighters said. But many people had to be rescued from the upper floors of their homes after ignoring pleas to flee zones at risk from floods, officials said.

"I am seriously concerned for people's lives," said Vincent Ignizio, a Staten Island councilor. Police appealed for boats to conduct rescue missions in Staten Island and at Coney Island in Brooklyn.

Four other dead were reported in New York state outside the main city.

The hurricane whipped up a record storm surge of 4.15 metres and seawater inundated the key Queens Midtown and the Battery Park-Brooklyn tunnels which take traffic from Manhattan Island to nearby suburbs.

The water threatened to engulf the building site at the World Trade Centre where the September 11, 2001 attacks were staged.

Many cars in the financial district were swamped, some in New York suburbs were swept away. Debris crushed some cars.

The Con Edison power company said 500 000 homes in New York City were without power. Company vice-president John Miksad told reporters it could take a week to completely restore power.

He blamed floods or flying debris for an explosion at a sub-station on the east side of Manhattan's Midtown at the height of the storm. Film of the explosion has been widely viewed on YouTube.

Much of lower Manhattan was blacked out after the explosion. New York University hospital had to move patients to other hospitals after it lost power and a back-up generator.

"We went up to 14-foot tides, which no-one was forecasting," Miksad said.

Howling winds of up to 150 kilometres an hour battered the city, pushing over a crane atop a 306-metre luxury apartment skyscraper overlooking Central Park.

The boom of the crane swayed in the fierce gusts and police evacuated surrounding buildings and streets because of the risk that it could fall.

In another spectacular demonstration of its power, the hurricane pulled off the facade of a three-story building in the Chelsea district. No injuries were reported however.

Tens of thousands of people ignored appeals by the New York mayor to leave districts at risk where police had toured the streets calling for inhabitants to take special buses to safety.

Authorities issued a mandatory evacuation order for 375 000 people at risk, but the majority decided to brave it out.

New York state called up 2 100 National Guard troops on Sunday and Monday to patrol threatened districts.

"If water is coming into your home, go to the highest area," New York mayor Michael Bloomberg told a press conference amid the worst of the carnage.

Bloomberg said the public was making 10 000 emergency 911 calls every 30 minutes and appealed to New Yorkers to not just to report power cuts. "It means that genuine emergencies are not being answered," he said.

He also called for taxis to stay off the roads to give priority to emergency vehicles.

New York authorities closed the subway train system and nearly all tunnels and bridges that take traffic off Manhattan as the full force of Sandy hit America's biggest city.

The subway was to remain closed on Tuesday, along with schools, public buildings.

Atlantic City, inland areas affected

Sandy also roared ashore with fierce winds and heavy rain near the gambling resort of Atlantic City, forcing evacuations, shutting down transportation and interrupting the presidential campaign.

Aside from the widespread flooding through New York City, some cases were well inland. Police confirmed at least two people were killed by the storm in the city, and deaths were reported as far away as Toronto as well.

High winds and flooding racked hundreds of miles (km) of Atlantic coastline while heavy snows were forecast farther inland as the centre of the storm marched westward.

The storm’s wind field stretched from the Canadian border to South Carolina, and from West Virginia to an Atlantic Ocean point about halfway between the United States and Bermuda, easily one of the largest ever seen.

More than three million customers already were without power by early evening and more than one million people were subject to evacuation orders. Many communities were swamped by flood waters.

The National Hurricane Center said Sandy came ashore as a “post-tropical cyclone,” meaning it still packed hurricane-force winds but lost the characteristics of a tropical storm. It had sustained winds of 129 kilometres per hour well above the threshold for hurricane intensity.  The storm’s target area includes big population centres such as New York City, Washington, Baltimore and Philadelphia.

Trees were downed across the region, untethered pieces of scaffolding rolled down the ghostly streets of New York City, falling debris closed a major bridge in Boston and floodwater inundated side streets in the resort town of Dewey Beach, Delaware, leaving just the tops of mailboxes in view.

In Fairfield, a Connecticut coastal town and major commuter point into Manhattan, police cruisers blocked the main road leading to the beaches and yellow police tape cordoned off side entrances. Beach pavilions were boarded up with plywood, and gusts of wind rocked parked cars.

“People are definitely not taking this seriously enough,” said police officer Tiffany Barrett. “Our worst fear is something like Katrina and we can’t get to people.”

US stock markets were closed for the first time since the attacks of September 11, 2001, and will remain shut on Tuesday. The federal government in Washington was closed and schools were shut up and down the East Coast.

One disaster forecasting company predicted economic losses could ultimately reach $20 billion, only half insured.

Governors up and down the East Coast declared states of emergency. Maryland’s Martin O’Malley warned there was no question Sandy would kill people in its path.

Two people died in the New York borough of Queens, a man in a house hit by a falling tree and a woman who stepped into an electrified puddle of water. Toronto police also recorded one death, a woman hit by flying debris.

Presidential campaign interrupted

The storm interrupted the US presidential campaign with eight days to go before the election, as President Barack Obama and Republican challenger Mitt Romney cancelled events. Both men acted cautiously to avoid coming across as overtly political while millions of people are imperilled.

Off North Carolina, the US Coast Guard rescued 14 of the 16 crew members who abandoned the replica ship HMS Bounty, using helicopters to lift them from life rafts. The Coast Guard later recovered the body of an “unresponsive” 42-year-old woman while continuing to search for the 63-year-old captain of the ship, which sank in 5.5-metre seas.

On the small New York island neighbourhood of City Island, which juts into Long Island Sound east of the Bronx, many residents were ignoring a mandatory evacuation order. The narrow island, known for its seafood joints and maritime-themed antique shops, is home to an isolated, working-class community of New Yorkers who say they’re used to big storms and flooding.

Joe Connelly, 52, a trucker from the Bronx, was leaving the City Island Marina after checking on his two motor boats. He said he watched the water from the first storm-driven high tide swamp a nearby dock.

“We were concerned that the whole dock was going to float away and out to sea,” he said. “It had about four feet to go before that happened.”