Divers have plucked two more bodies from a sunken passenger ferry and scrambled to plug an oil leak in the wreckage after a collision with a cargo ship.

Divers are combing through a sunken ferry to retrieve the bodies of more than 200 people who are missing after a collision with a cargo vessel near the central Philippine port of Cebu.

Gunmen have freed the 47 hostages they were holding at a jungle hideout in the southern Philippines after government negotiators agreed not to arrest the outlaws for the abductions or past murder charges, officials said today.