MIAMI - Hurricane Bill weakened on Thursday, falling to a Category 3 storm with its winds dropping to 125 mph, but hurricane watchers said it had the potential to reach Category 4 status again.

Bill, the first hurricane of the season, still could result in a hurricane or tropical storm watch for Bermuda on Thursday, the U.S. National Hurricane Center said.

At 4:40 a.m. EST the hurricane was churning about 325 miles north-northeast of the Leeward Islands and 790 miles south-southeast of Bermuda. It was moving northwest at 18 mph (30 kmh) and expected to hold a northwesterly course for another day before turning north-northwest by late on Friday.

Bermuda was expected to have heavy rain, high wind and big swells.

The Bermuda Sun newspaper reported U.S. Secretary of State Hillary Clinton and her husband, former President Bill Clinton, planned to fly to Bermuda for a private vacation of three to four days at a beach resort. The State Department declined to officially confirm where Clinton was.

Hurricane Bill was downgraded to Category 3 on the Saffir-Simpson scale about 24 hours after it had been declared a Category 4 with 135 mph winds. The hurricane center said it could strengthen in the next 24 hours into a Category 4 storm again.

Hurricanes of Category 3 or higher on the five-step Saffir-Simpson intensity scale are considered major storms and are the most destructive type.

Hurricane Bill has posed no threat to U.S. oil and gas installations in the Gulf of Mexico.

(Editing by Bill Trott)