One guest is missing after the £30million Bayesian sailboat capsized during a freak storm off Porticello, Sicily, at 4am on Monday.
Local civil protection chief Salvo Cocina confirmed two of the bodies brought up from 160ft down in the Mediterranean had been identified as Mr Lynch, 59, and his 18-year-old student daughter.
He added: "I would like to express my deepest sympathy to the families of the victims." Sources said the bodies of the tech mogul and Hannah were discovered by search teams in one of the cabins, between mattresses.
The bodies of two men and one woman were taken to a morgue to be formally identified, while the genders of the two others had not been confirmed by last night.
Guests unaccounted for include Morgan Stanley boss Jonathan Bloomer, 70, and his wife Judy, 71, plus American lawyer Chris Morvillo, 59, and his jewellery designer wife Neda, 57.
The body of yacht chef Recaldo Thomas was retrieved on Monday.
Returning search teams were yesterday seen to gently hand green body bags over to waiting emergency crews on the harbourside at Porticello.
The remains were later placed in ambulances and taken off to a mortuary. Bystanders bowed their heads and wept as the grim operation continued, while church bells tolled in the background.
The bodies were recovered after specialist teams had finally managed to break through a 3cm-thick glass panel in the Bayesian's hull, using special jacks made for them by a locksmith in Porticello.
Firefighters' Cari said that divers equipped with remotely operated subsea vehicles had also reached the lounge area of the 184ft yacht, after forcing their way along its narrow passageways through floating debris that had been hindering their progress.
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