BEIJING (CNN) -- A ship caught in a violent storm caught fire and cracked open off the coast of Shandong in eastern China, killing at least 290 people, the official Xinhua News Agency reported on Thursday.

The Dashun was carrying 312 people when it wrecked late Wednesday in gale-force winds and towering waves near the Shandong port of Yantai, the report said.

Xinhua said the Dashun set off a distress signal when flames erupted on its second deck, but ships in the area were unable to approach the vessel because of choppy seas and high winds.

The fire spread to the third deck and the main helm of the ship broke apart about four hours later. The ship drifted until it was found stranded at about 11:45 p.m. (1545 GMT), the report said.

Temperatures of around 0 C (32 F) further hampered rescue operations.

The report cited rescue workers who said only 20 people had been rescued by Thursday afternoon.

The cause of the fire was under investigation.

The ship was heading across the mouth of the Bohai Bay bound for the northeastern port of Dalian, 400 km (250 miles) east of Beijing when it was forced to turn back.

It sent out distress signals when the flames were seen at 4:30 p.m. (0830 GMT) on Wednesday and started to break up four hours later. The last signals from the ship were picked up just before midnight (1600 GMT), Xinhua said.