* No confirmed wreckage found, "life raft" report false alarm
* Officials say possibility of hijacking cannot be ruled out
* Questions over security after at least 2 stolen passports used
* Jet may have disintegrated in mid-air - investigation source
* 227 passengers and 12 crew presumed dead aboard lost flight
By Eveline Danubrata and Nguyen Phuong Linh
KUALA LUMPUR/PHU QUOC ISLAND, Vietnam, March 10 (Reuters) - T he disappearance of a Malaysian airliner about an hour into a flight to Beijing is an "unprecedented mystery", the civil aviation chief said on Monday, as a massive air and sea search now in its third day failed to find any trace of the plane or 239 people on board.
Dozens of ships and aircraft from 10 countries scoured the seas around Malaysia and south of Vietnam as questions mounted over possible security lapses and whether a bomb or hijacking attempt could have brought down the Boeing 777-200ER which took off from the Malaysian capital, Kuala Lumpur.
The area of the search would be widened from Tuesday, Azharuddin Abdul Rahman, the head of Malaysia's Civil Aviation Authority, told reporters.
A senior police official told Reuters that people armed with explosives and carrying false identity papers had tried to fly out of Kuala Lumpur in the past, and that current investigations were focused on two passengers who were on the missing plane with stolen passports.
"We have stopped men with false or stolen passports and carrying explosives, who have tried to get past KLIA (airport) security and get on to a plane," he said. "There have been two or three incidents, but I will not divulge the details."
Interpol confirmed on Sunday at least two passengers used stolen passports and said it was checking whether others aboard had used false identity documents.
Azharuddin said a hijacking attempt could not be ruled out as investigators explore all theories for the loss of Malaysia Airlines Flight MH370.
"Unfortunately we have not found anything that appears to be objects from the aircraft, let alone the aircraft," he told a news conference. "As far as we are concerned, we have to find the aircraft. We have to find a piece of the aircraft if possible."
Azharuddin also said the two men with stolen passports did not look like Asians, but he did not elaborate. Airport CCTV footage showed they completed all security procedures, he said.
"We are looking at the possibility of a stolen passport syndicate," he said.
About two-thirds of the 227 passengers and 12 crew now presumed to have died aboard the plane were Chinese. The airline said other nationalities included 38 Malaysians, seven Indonesians, six Australians, five Indians, four French and three Americans.
China urged Malaysia to speed up the search for the plane.
"This incident happened more than two days ago, and we hope that the Malaysians can fully understand the urgency of China, especially of the family members, and can step up the speed of the investigation and increase efforts on search and rescue," Foreign Ministry spokesman Qin Gang told reporters in Beijing.
A senior source involved in preliminary investigations in Malaysia said the failure to find any debris indicated the plane may have broken up mid-flight, which could disperse wreckage over a very wide area.
"The fact that we are unable to find any debris so far appears to indicate that the aircraft is likely to have disintegrated at around 35,000 feet," said the source.
Asked about the possibility of an explosion, the source said there was no evidence of foul play and that the aircraft could have broken up due to mechanical causes.
Still, the source said the closest parallels were the bomb explosions on board an Air India jetliner in 1985 when it was over the Atlantic Ocean and a Pan Am aircraft over the Scottish town of Lockerbie in 1988. Both planes were cruising at around 31,000 feet at the time.
The United States extensively reviewed imagery taken by American spy satellites for evidence of a mid-air explosion, but saw none, a U.S. government source said. The source described U.S. satellite coverage of the region as thorough.
MOSS-COVERED CABLE REEL
Hopes for a breakthrough rose briefly when Vietnam scrambled helicopters to investigate a floating yellow object it was thought could have been a life raft. But the country's Civil Aviation Authority said on its website that the object turned out to be a "moss-covered cap of a cable reel".
Flight MH370 disappeared from radar screens in the early hours of Saturday, about an hour into its flight from Kuala Lumpur, after climbing to a cruising altitude of 35,000 ft (10,670 metres).
Underlining the lack of hard information about the plane's fate, a U.S. Navy P-3 aircraft capable of covering 1,500 sq miles every hour was sweeping the northern part of the Strait of Malacca, on the other side of the Malaysian peninsula from where the last contact with MH370 was made.
No distress signal was sent from the lost plane, which experts said suggested a sudden catastrophic failure or explosion, but Malaysia's air force chief said radar tracking showed it may have turned back from its scheduled route before it disappeared.
The Boeing 777 has one of the best safety records of any commercial aircraft in service. Its only previous fatal crash came on July 6 last year when Asiana Airlines Flight 214 struck a seawall on landing in San Francisco, killing three people.
The passenger manifest issued by the airline included the names of two Europeans - Austrian Christian Kozel and Italian Luigi Maraldi - who were not on the plane. Their passports had been stolen in Thailand during the past two years.
An Interpol spokeswoman said a check of all documents used to board the plane had revealed more "suspect passports", which were being investigated.
"Whilst it is too soon to speculate about any connection between these stolen passports and the missing plane, it is clearly of great concern that any passenger was able to board an international flight using a stolen passport listed in Interpol's databases," Interpol Secretary General Ronald Noble said.
A European diplomat in Kuala Lumpur cautioned that the Malaysian capital was an Asian hub for illegal migrants, many of whom used false documents and complex routes including via Beijing or West Africa to reach a final destination in Europe.
"You shouldn't automatically think that the fact there were two people on the plane with false passports had anything to do with the disappearance of the plane," the diplomat said.
"The more you know about the role of Kuala Lumpur in this chain, the more doubtful you are of the chances of a linkage."
A Thai travel agent who arranged the tickets for the two passengers using the stolen passports said she had booked them on the flight via Beijing because they were the cheapest tickets, the Financial Times reported.
The travel agent in the resort of Pattaya said an Iranian business contact she knew only as "Mr Ali" had asked her to book tickets for the two men on March 1.
She had initially booked them on other airlines but those reservations expired and on March 6, Mr Ali had asked her to book them again. She told the newspaper she did not think Mr Ali, who paid her in cash and booked tickets with her regularly, was linked to terrorism.