HOBART, Australia (AP):

DEFENDING champion Wild Oats XI and fellow maxi Skandia sailed yesterday toward an expected tight finish in the annual Sydney to Hobart yacht race.

Wild Oats XI, trying to win Sydney-Hobart line honours for the fourth straight year, led the 100-yacht fleet out of Sydney Harbour on Friday. It exchanged the lead with Skandia several times and yesterday the two yachts were more than 50 nautical miles ahead of the rest of the fleet in Bass Strait.

Skandia, the 2003 winner skippered by Grant Wharington, held less than a one-nautical-mile lead over Wild Oats with about 135 nautical miles remaining, according to the race website.

Skippered by Mark Richards, Wild Oats holds the record in the 628 nautical mile (723-mile, 1,163-kilometre) race of one day, 18 hours, 40 minutes, 10 seconds set in 2005.

Diminishing winds forecasted

Although the leading yachts were sailing slightly ahead of the race record in strong northerlies, diminishing winds were forecasted and expected to slow the fleet as it approached Hobart and a likely finish Sunday morning (Australia time).

Wild Oats XI navigator Iain Burns said his crew was stalking Skandia, sailing gybe for gybe, within sight of each other, but unable to bridge the gap.

"This is good racing, great sailing, we are working hard to chase and catch Skandia," Burns said. "The conditions are great and we are hoping to catch a few breaks as we continue to head to the finish."

Richards said the tricky part of the race - rounding Tasman Island for the Derwent River run to the finish - was about to begin.

"As we've seen in the past, lots of races have been won and lost there," Richards said.

There have been two retirements.

Mishap

Georgia, a New Zealand-built Farr 52 owned by race veterans John Williams and Graeme Ainley, broke a rudder after possibly hitting a whale. The boat took on water and later sank. Two nearby boats rescued the 14 crew members who were later taken to shore on a police boat.

Ainley said there were no injuries to his crew, although they had the sobering experience of watching their boat sink.

"It's hard to take, but the issue is that everyone is safe," Ainley said. "The bang was indicative of running into something and it was a pretty loud bang, and so I guess it was something reasonably solid. It was after dark so we couldn't see it."

The other retirement, the 50-year-old boat Sanyo Maris, pulled out with broken equipment and returned to Sydney.

Deteriorating weather conditions and increasing winds are forecast after the leaders finish today, meaning some of the smaller, slower boats that are still in Bass Strait could be affected as they compete for handicap honours.

The race, which was first held in 1945, had been hit by severe storms in the past. This race marks the 10th anniversary of the 1998 event in which six sailors died and seven boats sank during a storm.