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BRISBANE, Australia – Evacuated victims began returning to homes caked in sludge on Friday as Australia's flood crisis eased, though one sandbagged town watched nervously as a swollen river level crept higher and forecasters warned of more rain.

Officials said they were moving from the emergency phase into cleanup as flood water levels stabilized in the hard-hit coastal city of Rockhampton and dropped further in towns further inland.

Queensland state has been in the grip of Australia's worst flooding in some 50 years since drenching tropical rains fell for days starting just before Christmas. At its worst, an area the size of France and Germany combined was covered with water, some 40 townships were inundated and nearly 4,000 people evacuated.

Police say 10 people have died in swollen rivers or floodwaters in Queensland since late November.

The flooding shut some 40 coal mines in the state, pushing up global prices, and has hurt wheat, mango, sugarcane and other crops. Road and rail links have been washed away in many places, and officials warn it could be months before they are restored so industry and other activity can return to normal.

Some of the 150 people of Condamine went home in a convoy on Thursday for the first time since everyone in the small cattle-ranch supply town 190 miles (300 kilometers) west of Brisbane, the state capital, was evacuated on Dec. 30 to escape rising floodwaters.

They found the waters gone, but that 42 of the town's 60 houses had been inundated by the flood.

"It's just flattened everything," said pub owner Shane Hickey. "All the grass is mud, all the plants have been torn out of the ground, the trees have gone over and are just covered in silt and mud."

The town still has no drinking water and officials warned of waterborne disease. Local Mayor Ray Brown said electricians, plumbers, portable toilets and water and food were being brought in for residents returning Friday.

As the cleanup began in some towns, others were bracing for the worst of the floods yet to arrive.

In St. George, where levies of earth and sandbags have been built around dozens of homes, officials said the floods' peak was now expected to be lower than originally thought, meaning fewer than 30 homes in the town of some 2,500 people were at risk.

In Dalby, east of Condamine, officials said floodwaters were rising faster than expected and were expected to peak Friday rather than the weekend. The town's swollen creek is expected to inundate yards and a caravan park, but not to enter houses, Brown said.

Authorities renewed warnings for people to stay out of floodwaters, saying they were still dangerous even as they eased.

"I think people often underestimate the awesome power of floodwaters," Queensland Premier Anna Bligh said. "It is a very dangerous body of water. You are only being asked to move for your safety and the safety of your family and emergency workers."

Nearly 4,000 people across Queensland have been evacuated from their homes since driving rains that began just before Christmas left much of the region under a sea of murky water. Around 1,200 homes have been inundated, with another 10,700 suffering some damage in the flood zone.

The total cost of the floods is not yet known. Bligh has said the price of rebuilding homes, businesses and infrastructure coupled with economic losses could be as high as $5 billion.

The mayor of Rockhampton, a city of 75,000 that was the largest hit, said it would take 12 months before the town recovered.

The city's overflowing Fitzroy River is very slowly receding, after spilling onto 3,000 properties and leaving 200 homes with water above the floorboards. More than 500 people were evacuated from the city.

The Bureau of Meteorology issued a severe thunderstorm warning for a region just south of Rockhampton, saying heavy rain, hail and flash flooding could be expected for several hours on Friday. Heavy storms were also forecast for other parts of the state.