A pair of survivors have been found in a cabin aboard a luxury cruise ship that ran aground off the Tuscan coast of Italy, the ANSA news agency reports.
No details on their medical status or nationality are available.
In another development, all Canadians aboard the stricken Costa Concordia are safe.
Based on information currently available, 12 Canadians were on the ship and they are well and accounted for, Foreign Affairs spokesman Claude Rochon said.
Three bodies have been recovered from the sea after the Italian cruise ship with 4,234 people aboard ran aground a few hundred metres off the tiny island of Giglio near the coast of Tuscany late Friday.
Italian officials are matching names on the cruise ship's list of passengers and crew with those of survivors and say the number of the unaccounted for has dropped to roughly 40 from as many as 70.
Earlier Saturday, the captain of the Costa Concordia was was arrested, according to a local prosecutor, and reportedly faces criminal charges.
Authorities in the city of Grosseto confirmed Francisco Schettino has been detained for alleged manslaughter, abandoning his ship while people were still aboard and causing a shipwreck.
The ANSA news agency says he will held until next week, when a judge will decide whether he should be released or formally put under arrest.
Divers with the Italian coast guard headed to the belly of the cruise ship to search for the missing after the ship ran aground Friday night.
Capt. Cosimo Nicastro said Saturday divers were carrying out a risky operation to inspect the submerged half of the Costa Concordia in case anyone remained trapped inside.
Nicastro told Sky TG24 TV rescuers carried out an extensive search of the waters near the ship for hours and "we would have seen bodies," adding that "the place where they might be is in the belly of the ship."
The ship ran aground off the tiny island of Giglio, forcing thousands of passengers to jump into the Mediterranean Sea as water poured in through a 50-metre gash in the hull.
"They didn't send a mayday," officer Emilio Del Santo of the Coastal Authorities of Livorno told CNN. "The ship got in contact with us once the evacuation procedures were already ongoing."
Investigators will be examining how a ship travelling in calm waters, on a route that it normally does more than 50 times a year, could hit such a large rock.
The ship is run by by Costa Cruises of Genoa, Italy which, in turn, is owned by Carnival Corporation — the largest cruise operator in the world.
Two French passengers and a Peruvian crewmen died in the accident, the Italian news agency ANSA reported. News reports said 69 people were still unaccounted for after the Costa Concordia hit a sandbar near the coast of Tuscany.
Some of the people aboard the Costa Concordia jumped and swam 350 metres to the island of Giglio. Others scrambled into lifeboats.
So far, there has been confirmation that a couple from Wingham, Ont., are among the survivors. Alan and Laurie Willits were watching the magic show in the ship's main theatre when they felt an initial lurch, as if from a severe steering manoeuvre.
"[The ship] steered quickly to the right, the ship banked. It was sliding us out of our seats...and then there was a shudder. You could tell we definitely hit something," recalled Willits on the phone from Rome to CBC News on Saturday.
Willits said it took some time before passengers were informed of how serious the problem was.
"They were saying it was a generator problem. A generator problem would not make a ship start leaning," said Willits. "We should have been in the life boats sooner, in my opinion."
When the ship — carrying 4,234 passengers and crew — began listing, the signal to abandon ship was sounded. By Saturday morning, the ship could be seen lying on its side in the water.
Survivors who escaped recounted a scene reminiscent of Titanic, describing a delayed then panicked evacuation, as plates and glasses crashed around them and they crawled along upended hallways trying to reach safety.
"Passengers were eating dinner. It was around 9:35," CBC's Megan Williams said, reporting from Rome. "The ship groaned and the lights went out."
"They were told at the time that there was a short-circuit, that they had in fact not crashed. Other information has shown that in fact they did crash. They probably hit the rocks off the island of Giglio, which is about a mile off the coast of Tuscany. The ship should have been about six miles off the coast, so something clearly went wrong."
A lot of the lifeboats were apparently filled with water by the time passengers got to them, according to media reports.
Passengers complained the crew failed to give instructions on how to evacuate and once the emergency became clear, delayed lowering the lifeboats until the ship was listing too heavily for many of them to be released.
Crew member Fabio Costa described a chaotic scene near one of the lifeboats.
"Everything happened really, really fast. We saw the water coming in and the emergency signal, and everybody went to the place to try to get on the boat, but people started to panic. So they were pushing each other," he said.
"The crew was trying to help the passengers. A lot of people were falling down the stairs and they were hurt because things fell on them. When they had to get on the lifeboat, everyone was pushing each other, so it was pretty chaotic."
Helicopters plucked to safety some 50 people who were trapped on the ship after it listed so badly they couldn't launch lifeboats, Coast Guard Cmdr. Francesco Paolillo told The Associated Press in Rome by telephone from his command in the Tuscan port city of Livorno.
Passenger Mara Parmegiani, a journalist, told the ANSA news agency that "it was like a scene from the Titanic."
Survivor Christine Hammer, from Bonn, Germany, shivered near the harbour of Porto Santo Stefano, on the mainland, after stepping off a ferry from Giglio. She was wearing elegant dinner clothes — a cashmere sweater, a silk scarf — along with a large pair of hiking boots, which a kind islander gave her after she lost her shoes in the scramble to escape, along with her passport, credit cards and phone.
Hammer, 65, told The Associated Press that she was eating her first course, an appetizer of squid, on her first night aboard her first-ever cruise, which was a gift to her and her husband, Gert, from her local church where she volunteers.
Suddenly, "we heard a crash. Glasses and plates fell down and we went out of the dining room and we were told it wasn't anything dangerous," she said.
The passengers were then instructed to put on life jackets and take to the life rafts but, Hammer said, they couldn't get into the boats because the cruise liner was tilting so much the boats couldn't be lowered into the cold, night sea. The passengers were eventually rescued by one of several boats in the area that came to their aid.
"It was terrible," Hammer said, as German and Spanish tourists were about to board buses at the port.
"No one counted us, neither in the life boats or on land," said Ophelie Gondelle, 28, a French military officer from Marseille. She said there had been no evacuation drill since she boarded in France on Jan. 8.
As dawn neared, a painstaking search of the 290-metre long ship's interior was being conducted to see if anyone might have been trapped inside, Paolillo said.
Costa Cruises said the Costa Concordia was sailing on a cruise across the Mediterranean Sea, starting from Civitavecchia with scheduled calls to Savona, Marseille, Barcelona, Palma de Mallorca, Cagliari and Palermo.
It said about 1,000 Italian passengers were onboard, as well as more than 500 Germans, about 160 French and about 1,000 crew members.