ATHENS (Reuters) -Firefighters battled for a third day on Friday to put out a wildfire on the Greek island of Crete that has razed forests and olive groves and forced thousands of residents and tourists to leave the area.

Around 130 firefighters, 48 vehicles and six helicopters were deployed in the effort, working with gale-force wind gusts and dry conditions that could rekindle the fire in areas already contained.

Wind gusts could fan embers from smouldering trunks of olive and pine trees on the ground, a fire brigade official told Reuters, speaking on condition of anonymity.

The fire in Crete comes as much of Europe swelters in an early summer heatwave, which officials have linked to at least eight deaths on the continent.

The fire, which broke out in a village about 16 km (10 miles) east of Ierapetra on Wednesday, has consumed swathes of agricultural land in the southeastern corner of the island, leaving dead animals, damaged houses and scorched farmhouses.

Some 1,000 residents evacuated on Wednesday found temporary shelter at an indoor stadium and in nearby hotels and about 5,000 holidaymakers left the area.

Many of the evacuees were expected to make their way back home later on Friday as the situation improved, George Tsapakos, a deputy civil protection governor for Crete, told Reuters.

Tourism is a key earner in Crete, the largest island in Greece, and local hoteliers were concerned about the impact on future bookings as the fire hit at the start of the peak summer holiday season.

Separately, some 148 firefighters battled a fire that broke out in the Athens suburb of Pikermi on Thursday, threatening many homes, causing power cuts and prompting authorities to move more than 300 people to safety. The fire was contained but not extinguished, the fire brigade official said.

Temperatures in Greece were forecast to reach up to 38 degrees Celsius (100.4 Fahrenheit) on Friday, the Greek weather service said.

In Italy, the health ministry put 20 of the 27 cities it monitors for heatwaves on red alert on Friday. RAI public broadcaster said temperatures would go as high as 38 C in Florence and 37 C in Rome, Bologna and Perugia.

With the heat comes a higher risk of wildfires.

Greece and other Mediterranean countries are in an area dubbed "a wildfire hotspot" by scientists - with blazes common during hot and dry summers. These have become more destructive in recent years due to a fast-changing climate. 

(Reporting by Angeliki KoutantouEditing by Frances Kerry)