XALAPA, Mexico -- Hurricane Grace killed at least eight people, including five children from the same family, as it tore through eastern Mexico Saturday, causing flooding, mudslides and damage to homes and businesses.

The storm made landfall in Mexico for a second time near Tecolutla in Veracruz state as a major Category Three storm with winds of 125 miles (200 kilometers) per hour.

It later fizzled out as it moved inland over the central highlands, but not before causing widespread damage.

In the Veracruz state capital, Xalapa, streets were turned into muddy brown rivers.

Seven people died there and one more in the city of Poza Rica, Veracruz Governor Cuitlahuac Garcia told a news conference.

The victims included a mother and five of her children, who were buried when a hillside collapsed on their small home.

"I heard a bang on the roof and I went out to look," said their father Adan Moreno, who witnessed the tragedy.

"I heard the earth collapsing. The hill was swept away and they were all down there -- my wife and six children," he told AFP, his voice breaking.

He dug through the mud with the help of relatives but only one child was pulled out alive.

His wife and five other children, including a two-week-old baby girl, did not survive.

- 'It's destroyed' -
The streets of Tecolutla, home to about 24,000 people, were littered with fallen trees, signs and roof panels.

Esteban Dominguez's beachside restaurant was reduced to rubble.

"It was many years' effort," he said.

"Over there was my house, but it's destroyed. I'm left with no roof or furniture," he said.

Many homes in the region were left without electricity.

Grace dissipated as it churned inland, drenching Mexico City, but could develop into a new cyclone next week in the Pacific, according to the US National Hurricane Center.

The Mexican authorities remained on alert due to the threat of rivers overflowing and landslides, mainly in Veracruz.

President Andres Manuel Lopez Obrador offered his condolences to the families of the victims.

Nearly 8,000 civil defense members, soldiers and electricity board workers had been put on standby ready to tackle the aftermath of the storm, he said on Friday night.

Authorities in Veracruz state said they had prepared 200 storm shelters and urged residents to hunker down in safe places.

They closed most highways in Veracruz, which is crossed by numerous rivers.

- Fishermen affected -
In preparation for the storm, workers along the coast boarded up windows to protect stores, fishermen brought their boats ashore and residents secured their homes after stocking up on canned food and water.

"We will spend many days without fishing -- almost a week," said Isabel Pastrana Vazquez, head of Veracruz's federation of fisheries cooperatives.

"About 35,000 fishermen will be affected because we can't go out," he said.

In Casitas, a small tourist town on the coast, fisherman Domingo Hernandez said the roof had been ripped off his home.

"The whole sheet was blown off. I was there holding it," he said, expressing relief that his boat was not damaged too.

The hurricane had already lashed Mexico's Yucatan Peninsula earlier in the week, forcing thousands of tourists to hunker down in shelters but blowing through with no loss of life.