BEIJING - Chinese sailors rescued 29 people off Papua New Guinea's east coast after a ferry sank on Thursday with about 350 people on board, China Maritime Search and Rescue Center said.

The Zhonghe, owned by the China Ocean Shipping (Group) Co, spotted the sinking ferry before noon. It had originally been en route from Australia to Ningbo in East China when it rushed to the scene, said the center, which operates under the Ministry of Transport.

The stricken ferry, MV Rabaul Queen, carrying about 350 people, went down while traveling from Kimbe on New Britain island to the coastal city of Lae on the main island, the Australian Maritime Safety Authority said. Most of its passengers were saved.

Zhonghe was 37 kilometers from the scene when it received distress radio messages, said its captain, Lin Youfeng, 49. The ship immediately dashed to the ferry's location after getting clearance.

The ship, which displaces 65,000 tons, arrived at the spot at about 11 am local time and joined a rescue operation involving five other ships.

It attached nets to the port and starboard sides and used life rafts to bring the rescued on board, Lin said.

"The ferry was only 47 meters long but it was carrying 350 passengers. It was obviously overloaded," Lin said.

The 29 rescued survivors were accommodated in the ship's main meeting room. They were also provided with dry clothing and food.

One of the rescued, a child suffering from fever, received immediate medical care, the captain said.

From 4 pm the sea became choppy as winds picked up but the rescue operation continued until about 7:35 pm. The 29 survivors were then taken to the nearest port.

More than 200 people were rescued, according to the Australian Maritime Safety Authority.

Apart from the 29, "there are reported to be 219 survivors" on the five other rescue vessels, the authority said.

Australian Broadcasting Corp quoted police in Kimbe as saying that most of the passengers were students and trainee teachers.

The search was suspended until dawn Friday due to rough weather, said Nurur Rahman, the authority's rescue coordinator.

Australian Prime Minister Julia Gillard earlier described it as a "major tragedy".

She was speaking before details of the rescue operation had emerged and there were fears that hundreds of lives had been lost.

"Given the likely very high loss of life here, I think when this news comes to the attention of Australians around the country they will be thinking about the people of Papua New Guinea," Gillard said in the hours immediately after the sinking.

Papua New Guinea Prime Minister Peter O'Neill said the cause of the accident was unknown, but acknowledged that safety in the shipping industry was lax. "We need to bring some safety measures back into this industry," O'Neill said.

Xinhua and AFP contributed to this story.