* Rescuers search submerged cars for trapped people
* Power and water cuts affect over half of casino hub
* Macau overwhelmed; residents angry at slow response (Adds detail on observatory chief stepping down)
By Tyrone Siu and Farah Master
MACAU/HONG KONG, Aug 24 (Reuters) - The head of Macau's observatory stepped down on Thursday after chaos and confusion followed one of the strongest typhoons on record, in which at least nine people were killed and more than half the city was left without water and power.
Rescuers on Thursday searched submerged cars for trapped people in the former Portuguese territory, while overwhelmed emergency services scrambled to respond to crisis calls. Some casinos shut down while others were relying on back-up generators.
Many residents and tourists complained that the government was woefully unprepared for Typhoon Hato and its destructive winds of more than 200 kph (124 mph).
Macau's government broadcaster TDM said Typhoon Hato, a maximum signal 10 storm, was the strongest since 1968 to hit the world's biggest gambling centre, home to around 600,000 people.
"The city looks like it was just in a war," said one civil servant, who declined to be named as they were not authorised to speak to the media.
Hato on Wednesday hit the nearby financial hub of Hong Kong, uprooting trees, flooding streets, forcing hundreds of airline flights to be cancelled and halting financial trading. There were reports of 34 people injured in Hong Kong, which had not been hit by a signal 10 typhoon for five years.
At one stage, as Hato intensified, Hong Kong posted a signal 8 storm warning, saying it was likely to go higher, yet Macau's government rated Hato only a signal 3 typhoon.
"I am shocked with the late notice and lack of preparation that was given for this superstorm. Residents are in peril and unable to assess if help is on the way," said Ashley Sutherland-Winch, a marketing consultant in Macau.
Chief executive Fernando Chui, at a news conference on Thursday evening, announced the resignation of Fong Soi-kun, director of the Meteorological and Geophysical Bureau.
Exteriors of buildings, including parts of multi-billion dollar casinos, were ripped away by Hato's powerful winds.
Video footage sent by Macau residents to Reuters showed a man struggling to keep his head above water in an enclosed car park filled with debris, a truck toppling over and pedestrians flung across pavements.
Many of Macau's large casinos were relying on back-up generators.
Casino stocks listed in Hong Kong fell versus a rise in the benchmark Hang Seng Index on Thursday with the full impact on gambling revenues and economic cost still unknown, analysts said.
Nolan Ledarney, director of Crafted 852, a food website in Hong Kong, who was staying inside Galaxy's casino resort with his wife and three children, said guests had been corralled into safe areas.
Severe flooding overwhelmed Macau, which is in the process of building new infrastructure such as a light rail, to cope with a surge in visitors.
Macau has been rapidly transformed from a sleepy fishing village over a decade ago into a major gambling hub, but infrastructure has mostly failed to keep pace with its development.
Transportation remained in chaos, with damage to both of Macau's ferry terminals and roads crammed with traffic. Schools, museums and public venues remained closed on Thursday.
"The government cannot handle the challenge as the people would expect from a self-claimed first-class city," said Macau resident and political commentator Larry So.
Hato had been downgraded to a tropical storm on Thursday and was about 680 km (420 miles) west of Hong Kong and expected to weaken further as it moves inland over China. (Additional reporting by Anne Marie Roantree in Hong Kong and Andrew Galbraith in Shanghai; Editing by Michael Perry)