100 missing after Papua New Guinea ferry sinks

Scores of people are missing off Papua New Guinea after a ferry carrying about 350 passengers sank, Australian rescue authorities said, with many feared dead.

Australia's Maritime Safety Authority (AMSA) said 238 people had been plucked from the sea and from liferafts about 12 hours after the MV Rabaul Queen went down.

"This is obviously a major tragedy - 350 people on board a ship that has gone down," Australian Prime Minister Julia Gillard told reporters in Melbourne.

"It is likely a very high loss of life here."

Eight merchant vessels nearby had been diverted to the scene, with helicopters and Australian fixed wing aircraft also sent to help with the rescue, AMSA said.

"We are getting more life rafts out into the water," AMSA spokeswoman Carly Lusk said.

"There have been more reports of vessels sighting people in life rafts, so we're hoping for the number (of survivors) to increase in the very near future."

While earlier reports had said the weather was fair, AMSA said there were winds of 75kmh and swells of about 5m.

The 47 metre ship reportedly sank about 16km off Finschhafen on the South Pacific nation's north coast. The ferry was on its way from Kimbe, a dive spot on the island of New Britain, to the mainland city of Lae.

The ship's owners, Rabaul Shipping, said they had no information about what caused the accident, adding the vessel sank quickly and without sending a distress message.

"There is no sign of the Rabaul Queen," the company said in a statement emailed to Reuters.

Papua New Guinea's maritime authority said earlier at least 28 people had been rescued, with many more floating in the sea where the ferry went down.

Nurur Rahman, acting chief of Papua New Guinea's maritime safety authority, said it was too early to speculate on the cause of the sinking.

Survivors were being ferried to hospitals in Lae, the provincial capital and the country's second-largest city, he added.

Papua New Guinea (PNG) Prime Minister Peter O'Neill said the government would carry out a full investigation into the disaster, given the importance of sea transport in a country where the cost of flying is prohibitive for most people.

"We will leave no stone unturned. We need to bring some safety measures back into this industry," O'Neill said.

"We cannot afford to continue to lose our people's lives. Sea transport is one of the most important forms of transportation in the country."

PNG, Australia's nearest neighbour, is largely undeveloped, with poor infrastructure and limited facilities despite enormous resources wealth.

The majority of its six million people eke out subsistence livings in villages clinging to jungle-clad mountains or scattered around its many islands.