(Corrects category of storm to Category 1 from Category 2 in paragraph 7)
By David Alire Garcia
PUERTO VALLARTA, Mexico, Oct 24 (Reuters) - One of the strongest ever hurricanes lashed western Mexico with rain and winds of up to 165 mph (266 km/h), causing chaos in coastal towns and resorts but less damage than feared before weakening on Saturday as it moved inland.
Mowing down trees, flooding streets and battering buildings, Hurricane Patricia plowed into Mexico as a Category 5 storm on Friday before grinding inland, where it began to lose power in the mountains that rise up along the Pacific coast.
Around 15,000 tourists were hurriedly evacuated from the beach resort of Puerto Vallarta as people scrambled to get away from the advancing hurricane, whose massive swirl over Mexico could be seen clearly from space.
"It sparked chaos here, it ruined a lot of things, took down the roof, lots of trees. Things are in a bad state where we work," said Domingo Hernandez, a hotel worker in the resort of Barra de Navidad near to the major port of Manzanillo.
Thousands of residents and tourists ended up in improvised shelters but there were no early reports of fatalities and many felt they had escaped lightly.
At one point generating sustained winds of 200 miles per hour (322 km per hour), Patricia was the strongest hurricane ever recorded in the Western Hemisphere.
It then lost much of its power as it landed on Mexican soil northwest of Manzanillo. By early on Saturday it had been downgraded to a Category 1 storm with winds decreasing to about 75 mph, the U.S. National Hurricane Center said.
In a brief televised address on Friday, President Enrique Pena Nieto urged Mexicans to take precautions, warning that the storm which weather forecasters had said could cause catastrophic damage still posed a serious risk.
"The initial reports confirm that damage has been less than would be expected of a hurricane of this magnitude," Pena Nieto said. "But we cannot lower our guard yet."
The government cautioned that ash and other material from the volcano of Colima, some 130 miles (210 km) from Puerto Vallarta, could combine with heavy rainfall to trigger liquid cement-style mudflows that could smother villages.
The Mexican Red Cross said it had dispatched relief teams and trucks packed with humanitarian supplies ahead of the hurricane's landfall.
Patricia became a tropical storm in the Pacific on Thursday, strengthened rapidly as it closed in on the coast. Meteorological authorities compared it to Typhoon Haiyan, which killed over 6,300 people in the Philippines in 2013.
Destructive weather fronts have hit both the Pacific and Gulf coasts of Mexico over the years.
Thousands of tourists in the resorts of the Baja California Peninsula were stranded by tropical storm Odile in September 2014, while the convergence of two storms a year earlier triggered flash floods that killed dozens of people.
Patricia flooded parts of Puerto Vallarta, though the resort escaped the worst of the storm and dozens of tourists were able to leave shelters and return to their hotels on Friday night.
"I don't think there's going to be a big problem with the water," said Dario Pomina, 43, manager of the Posadas de Roger hotel in the city center. "Things are more or less okay."
Looking down on Patricia around 249 miles (401 km) above Earth on the International Space Station, U.S. astronaut Scott Kelly on Friday tweeted: "Stay safe below, Mexico."
The U.S. National Hurricane Center said Patricia could dissipate by Saturday night. At around 4 a.m. local time the storm was about 50 miles southwest of the city of Zacatecas and moving north-northeast at 21 mph.
The strongest storm on record was Cyclone Tip which hit Japan in 1979.
With reporting by Mexico City Newsroom; writing by Dave Graham; editing by Kieran Murray, Jason Neely and Frances Kerry