Residents of the capital San Jose said phones went down, electricity poles rattled on the streets and water flowed out of pools after the 7.6-magnitude quake. The were also unconfirmed media reports of people being treated for injuries.
A spokesman for the local Red Cross said two people died during the earthquake, one from a heart attack. He was not immediately able to confirm media reports the other person had been crushed under a collapsing wall.
Locals were shocked by the force of the quake, the biggest to hit Costa Rica since a 7.6 magnitude quake in 1991 left 47 dead.
"I was inside my car at a stop sign and all the sudden everything started shaking. I thought the street was going to break in two," said Erich Johanning, a 30-year-old who works in Internet marketing in San Jose. "Immediately I saw dozens of people running out of their homes and office buildings."
President Laura Chinchilla said there had not been reports of serious damage to buildings, although some hotels on the western Pacific coast had been hit, locals said.
The Pacific Tsunami Warning Center initially issued a warning for Pacific coastlines of Costa Rica, Nicaragua and Panama, but this was later canceled. The center had earlier warned of tsunamis for as far afield as Mexico and Peru.
The quake's epicenter was in western Costa Rica about 87 miles (140 km) from San Jose, the U.S. Geological Survey (USGS) said, and it was felt as far away as Nicaragua and Panama.
The Guanacaste region around the epicenter is known for its beaches, surf and volcanoes. With several nature and marine reserves it is less tropical than the rest of the Central American nation, with stretches of open savannah and mountains.
In the town of Nicoya, some 11 km (7 miles) east-southeast of the epicenter, Selenia Obando, a receptionist at the Hotel Curime, said the building had been left without lights and electricity. A floor had collapsed in the hotel but there were no injuries.
"It was horrible, like being in a blender going round and round," Obando said. "All the water sloshed out of the swimming pool. It's now about half full."
There was also an early report of damage to the Hotel Riu Guanacaste on Matapalo beach in Guanacaste.
But America Nava, a reservations clerk with Riu in Mexico, said it had only been evacuated. "There is no damage to the hotel, they're checking it to make sure everything is in order. As soon as that is finished, the guests will return."
Local media reported the death of a woman from a heart attack at the time of the earthquake in a nearby hospital.
Actor Mel Gibson owns a lush forest retreat at Playa Barrigona in Samara not far from the epicenter, which he recently put up for sale for $29.75 million. Guests to the 500 acre property have included Bruce Willis and Britney Spears.
The last serious quake to hit Costa Rica was a 6.1 magnitude quake in January 2009, which killed 40 people.
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