A major earthquake struck Mexico on Tuesday, unleashing panic as it damaged hundreds of buildings and caused homes in the capital to bounce like "trampolines".

Office workers fled into the street when the 7.4-magnitude quake shook Mexico City for more than a minute. Cell phone lines went down, buildings were evacuated, traffic snarled and the stock exchange had to suspend trading early.

At least 11 people were injured, the Interior Ministry said.

The quake hit hardest in the southwestern state of Guerrero, where around 800 houses were damaged, officials said. State  governor Angel Aguirre said he had reports of homes being knocked down, though state authorities could not confirm this.

The tremor was one of the strongest to hit the country since the devastating 8.1-magnitude earthquake of 1985, which killed thousands in Mexico City.

Mexico's interior ministry said the country would remain on high alert for the next 24 hours after 18 aftershocks to the quake were registered. Some were above magnitude 5.

Still, no deaths were reported on Tuesday and there were major disruptions to air travel or to oil installations. But it scared many residents and temporarily cut off electricity to 2.5 million users in the capital.

Mexico City Mayor Marcelo Ebrard said some rails of the subway system moved as a result of the tremor while leaks at three aqueducts feeding the eastern portion of the capital would leave hundreds of thousands of homes with no water for at least a day.

Martha Suarez, an Argentine living in Mexico City's Roma neighborhood said she had never known anything like it.

"My TV set fell over, the building felt like it was on a trampoline. This one was like no other I have felt before," Suarez said, holding her little dog close.

Scores of the houses damaged were in Ometepec, a town close to the epicenter of the quake in Guerrero, the state that is home to the popular Pacific beach resort Acapulco.

In neighboring Oaxaca, 68 mud-brick houses were damaged and at least five people were injured, one of them seriously, in the area around the town of Pinotepa Nacional near the Pacific coast, local emergency services said.

Some buildings in the capital's trendy district of Condesa were cracked by the earthquake, and residents raced out of buildings with young children and dogs in their arms.

"I swear I never felt one so strong, I thought the building was going to collapse," said Sebastian Herrera, 42, a businessman from a Mexico City neighborhood hit hard in 1985.

Television images showed part of a bridge collapsed onto a vehicle on the outskirts of Mexico City. Mayor Ebrard said no one was injured and that helicopter flyovers showed there was no sign of major damage in the capital.

President Felipe Calderon also said there were no reports of serious damage, and experts said the impact did not look severe.

Eqecat, a disaster modeling company whose software is used by insurers to predict exposure to natural disasters, estimated insured losses from the quake at less than $100 million.

Felt in Guatemala

Fear gripped many Mexico City locals when the quake hit.

Caroline Kloesel, a German executive working in the Las Lomas neighbourhood, said there was a stampede when people started fleeing the eighth floor of her building.

"At some point, we got stuck and everyone started pushing. A large man had tripped (on the staircase) and fallen down. And because he was very big, they couldn't help him stand up so everyone started walking over him," she said.

Mexico City's international airport was operating normally and only a couple of flights to the United States were temporarily grounded, a spokesman said.

State oil company Pemex said all its installations on the Pacific coast were operating normally, including the country's largest 330,000-barrel-per-day capacity Salina Cruz refinery.

The U.S. Geological Survey said the quake was magnitude 7.4 and aftershocks continued during the afternoon.

In Acapulco, schools were evacuated and some parents rushed to pick up their children, but there appeared to be no major damage to hotels or other buildings.

The White House, which has declined to confirm reports that President Barack Obama's daughter Malia was vacationing in Mexico, said the 13-year-old was safe. The quake was felt as far away as Guatemala City.

A spokesman for Mexico City's health authorities said hospitals and clinics were operating normally although some patients were evacuated from damaged buildings. – Reuters