The announcement came Thursday ahead of a key visit to New Orleans by President George W. Bush who was to set out a plan to rebuild the city, the main victim of Hurricane Katrina which has left more than 700 dead, with the toll mounting each day.

Nagin said business owners could enter the city on Saturday and Sunday, and about 180,000 residents would start returning from Monday in a phased operation because of the extent of the destruction.

"The city of New Orleans, starting this weekend, will start to breathe again," Nagin told a press conference.

"We will have life. We will have commerce. We will have people getting back into their normal modes of operation."

Authorities would concentrate on the famed French Quarter and central districts as they bid to reopen the city. But anyone returning would have to provide proof that they own a business or home in specific parts of New Orleans and would be subject to a dusk-to-dawn curfew.

Nagin said hospitals and special food shops would be opened and he was confident that power and water supplies would come back though he warned that in many places the water should not be drunk or used for washing.

The number of people in emergency shelters across the United States has fallen some 30,000 in four days to 111,000, authorities said. The army said it hoped to complete the operation to empty flood water from the streets by October 2, well ahead of the original schedule.

"It's a good day in New Orleans," the mayor declared in an upbeat mood. "The sun is shining. We're bringing New Orleans back."

Bush was to head back to the region for the fourth time since the storm, as his popularity plumbed new lows, to make a prime time speech to spell out long-term plans for rebuilding the disaster zone across Alabama, Louisiana and Mississippi.

Katrina has further damaged the US president's standing, already hit by the Iraq war.

A Wall Street Journal/NBC News poll released Thursday showed that just 40 percent of those interviewed approved of his overall performance as president, a record low since he took office in January 2001.

Nearly 60 percent of those polled said they were unhappy with the Bush administration's response to Hurricane Katrina.

The disaster's death toll zoomed past the 700 mark on Wednesday, with the discovery of another 51 corpses in Louisiana, where 474 were killed. Another 218 deaths have been recorded in Mississippi, two in Alabama and 14 in Florida.

Nagin warned Wednesday that more hideous discoveries will come out of the search of abandoned houses as the flood waters recede.

Some 485,000 people fled before or after Katrina battered the city and floodwaters then devastated much of the jazz capital.

Louisiana Attorney General Charles Foti has pressed negligent homicide charges against two owners of a New Orleans nursing home, where the bodies of 34 people were found.

Another grim find was made on Sunday at a New Orleans hospital, where 45 corpses were discovered.

While New Orleans made faltering steps toward recovery, Hurricane Ophelia, the seventh of the hurricane season, inflicted floods and power cuts on about 100,000 people in North Carolina on the Atlantic coast.

North Carolina Governor Mike Easley pleaded with the public to heed evacuation warnings, and ordered a state of emergency with dawn to dusk curfews in some towns.

Authorities poured emergency workers into North Carolina following vitriolic criticism for their slow response to Katrina.

The Federal Emergency Management Agency (FEMA) had about 250 specialist workers in the state already, Easley said. The Department of Homeland Security also said that several hundred trailers loaded with water and ice and dozens of trailers with emergency meals had been pre-positioned in several states around North Carolina.

US weekly jobless claims surged by 71,000 over the past week, with nearly all of the increase attributable to the impact of Hurricane Katrina, the Labor Department said Thursday.

Weekly claims totaled 398,000, compared with a revised 327,000 in the prior week.

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