* Water tops levee in Plaquemines Parish on city outskirts
* New Orleans mayor says levees in city are holding
* Storm moving slowly, torrential rains continue
* Energy companies start damage assessments
By Ellen Wulfhorst and Scott Malone
NEW ORLEANS, Aug 29 (Reuters) - Hurricane Isaac brought widespread flooding to the U.S. Gulf Coast on Wednesday, but elaborate defenses built to protect New Orleans after it was devastated by Hurricane Katrina seven years ago seemed to pass their first major test.
The huge, slow moving weather system, downgraded to a tropical storm on Wednesday, dumped massive amounts of rain to test new levees and flood containment systems and officials were careful not to declare a premature victory.
"This is a slow-moving storm and it is going to cause a tremendous amount of damage," said Louisiana Governor Bobby Jindal, warning of another day of wind and rain ahead.
Water flooded over the top of a levy on the outskirts of New Orleans and threatened to flood oil refineries and towns in the state and neighboring Mississippi. It looked, though, as if most energy facilities had escaped damage, and no deaths or serious injuries were reported.
While not nearly as strong as Katrina - a Category 3 hurricane on the five-step Saffir-Simpson scale when it slammed into New Orleans on Aug. 29, 2005 - authorities have warned repeatedly against underestimating Isaac.
Isaac slowed dramatically as it approached land and hugged the coast for hours before turning inland. This allowed it to take on more strength than many forecasters had expected, said Tim Doggett, the principal scientist at AIR Worldwide, a disaster modeling agency.
U.S. President Barack Obama's top advisor on disaster response, said the storm downgrade was not grounds for complacency.
"There is no such thing as 'just' a tropical storm," said Craig Fugate, director of the Federal Emergency Management Agency. "You have significant weather impacts still to occur."
At 8 p.m. EDT (0000 GMT), Isaac was still only 60 miles (95 km) west of New Orleans, the National Hurricane Center said.
Isaac made landfall in southeast Louisiana on Tuesday afternoon as a Category 1 hurricane before crawling up the coast and toward New Orleans and Baton Rouge on Wednesday. It brought high winds, storm surges, and torrents of rain.
"The slow motion and large size of this system are making the impacts more severe and more wide ranging than some folks might have perceived would be the case," said Rick Knabb, National Hurricane Center director.
The center said isolated maximum rainfall could reach 25 inches (64 cm) over much of Louisiana and parts of Mississippi and Alabama through Friday. A few spots in New Orleans already approached those totals.
New Orleans Mayor Mitchell Landrieu said the city's flood defenses, strengthened since 2005 with a $14.5 billion system of walls, floodgates, levees and pumps, had done their job in the face of the torrential rain.
"The federal levee system ... is fine," he told local radio. "There are no risks. It is holding exactly as we expected it to and is performing exactly as it should."
The storm taxed the city's sewage system, though, prompting Landrieu to urge residents to "keep the flushing to a minimum."
Tree limbs and street signs littered the streets on Wednesday, drainage canals filled with storm water and power was out in much of the city.
After a night of hunkering down, some residents braved the winds and rain on Wednesday.
Walking in the French Quarter at mid-afternoon, Cameron Bradford, 24, a University of New Orleans student, was barefoot, soaking wet, and carrying a can of beer.
"Why not? This is the cleanest I've ever seen the French Quarter. The water washed everything away," he said.
Police and National Guard units, many armed with assault rifles, patrolled the virtually empty downtown area of New Orleans, a port city which normally bustles with tourists drawn to its jazz bars, Creole cuisine and French colonial architecture. They were deployed to prevent a repeat of a wave of crime that followed Hurricane Katrina.
Just four looting arrests were reported this time, but Landrieu nonetheless imposed a dusk-to-dawn curfew on New Orleans for Wednesday night.
Benjamin Hubert, 25, who works driving a mule-drawn carriage for visitors in the French Quarter, took the curfew in stride. "They just don't want people taking advantage of a bad situation, that's all," he said.
At 8 p.m. EST (0000 GMT) Isaac was wobbling northwestward at five mph (8 kph), producing heavy rain and significant storm surges. Sustained wind speeds dipped to 60 mph (97 kph) and it was forecast to weaken to a tropical depression by Thursday night.
An unofficial 22.5 inches (57 cm) of rain had fallen in Arabi, Louisiana, not far from the Lower Ninth Ward of New Orleans, which was swamped by Hurricane Katrina and remains partially abandoned. Audubon Park, a few miles from downtown New Orleans, had received 17 inches of rain.
Rescue efforts were concentrated in low-lying Plaquemines Parish, southeast of New Orleans. Many residents in vulnerable areas there had disregarded a mandatory evacuation order made early this week.
Emergency officials said floodwaters had flowed over an 8-foot (2.4-metre) high levee between the Braithwaite and White Ditch districts. About 118 people were rescued in Plaquemines, including 25 trapped on their roofs or attics as water rose 14 feet (4.3 meters), authorities said.
"This storm has delivered more of a punch than people thought," said Parish President Billy Nungesser. "We're not out of the woods yet."
Private citizens in their boats led the rescue effort, Nungesser said, referring to boatmen from the Mississippi Delta and bayous popularly known as the "Cajun Navy."
Jesse Shaffer, a 25-year-old Braithwaite resident, told reporters that he and his father, 53, rescued more than 20 people in several outings in their fishing boat.
In Belle Chasse, in Plaquemines Parish, canals overflowed and threatened to swamp houses, but several residents there said they planned to ride the storm despite forecasts of another 10 to 12 hours of rain.
Before moving to the Gulf Coast, Isaac killed at least 23 people and caused significant flooding and damage in Haiti and the Dominican Republic before skirting the southern tip of Florida on Sunday.
More than 700,000 Louisiana customers of Entergy Corp and other local utilities were without power as of late afternoon. Entergy warned that it would be unable to begin restoring power until winds drop below 30 mph (48 kph).
Oil production in the U.S. Gulf of Mexico nearly ground to a halt as Isaac closed in on Louisiana on Tuesday and ports and coastal refineries curtailed operations.
But by Wednesday, big oil companies including Royal Dutch Shell and Exxon Mobil Corp began making plans to assess or restart operations.
Perceptions that the area's oil facilities would not sustain major damage left benchmark Brent crude settled on Wednesday down slightly, at $112.54 a barrel.