UPDATE 3-Explosion on Iranian oil tanker forces rescue team to retreat

* Fire rages for 4th day

* Tanker collided with freight ship on Saturday

* Chinese govt sees no 'large-scale' oil spill

* Fears grow tanker may break up or sink spewing bunker fuel

* Rescue crews battling winds, waves to locate 31 mariners (Updating throughout)

BEIJING/SEOUL, Jan 10 (Reuters) - Rescue crews were forced to retreat from a stricken Iranian oil tanker in the East China Sea on Wednesday following an explosion on the ship as a fire raged for a fourth day after a dramatic collision.

The blast happened on board the tanker in the afternoon after rescue crews were dousing the ship with foam in an attempt to put out the fire, China's Transport Ministry (MOT) said in a statement on Wednesday.

The cause and damage to the tanker from the incident were not clear. The ship was carrying condensate, a highly flammable ultra-light crude, to deliver to South Korea when it collided with a Chinese freight ship on Saturday.

Dozens of rescue boats from China and South Korea have been battling strong winds, high waves and poisonous fumes to comb a 900-square-nautical-mile (3,100-square-kilometer) area for 31 missing sailors and tame the fire, amid growing concerns the listing ship may explode or sink.

Iran's Navy joined the effort on Wednesday, a government official said, according to the Iranian Students' News Agency (ISNA).

The lashing winds are expected to ease on Thursday, the MOT said.

The tanker Sanchi (IMO:9356608), run by Iran's top oil shipping operator, National Iranian Tanker Co, col....

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