GEORGE TOWN, Cayman Islands (AP) -- Late-season Hurricane Paloma strengthened into a Category 2 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 grow into a Category 3 hurricane with winds of at least 111 mph (179 kph) 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.