A major 7.6 magnitude earthquake jolted southern Chile, prompting thousands to evacuate coastal areas, but no fatalities or major damage were reported in the tourism and salmon farming region.

The quake disrupted Christmas celebration plans for thousands of people who fled their homes on foot, in cars and on horseback, seeking higher ground amid torrential rains in some places as sirens warned of a potential tsunami.

"It was the biggest scare of our lives," said Denisse Alvarado, a resident of the southern Chile fishing town of Quellon, located on Chiloe Island, a tourist destination in Chile's Los Lagos region northwest of Patagonia.

Chile's National Emergency Office (ONEMI) lifted both the evacuation order and a tsunami watch three hours after the Christmas Day quake struck, telling nearly 5,000 people who had evacuated they could return to their homes.

ONEMI said one bridge in the area was impassable and some roads were closed as crews worked to restore electricity to some 21,000 homes left without power.

Officials had issued a tsunami warning earlier for areas within 1,000 km (621 miles) of the epicentre, just 39 km (24.5miles) southwest of Quellon, off the coast. But the warning was downgraded to a tsunami watch. Eight mostly small ports in the area were closed, Chile's Navy said.

The quake was felt on the other side of the Andes mountains in Argentina, in the southwestern city of Bariloche, but structural damage in areas close to the epicenter was limited, witnesses said.

The quake was relatively shallow, at a depth of about 34.6km (21.5 miles), according to the US Geological Survey (USGS).

Chile has a long history of deadly quakes, including a 8.8 magnitude quake in 2010 off the south-central coast, which also triggered a tsunami that devastated coastal towns.