Maltese police arrested one of the country's most prominent businessmen on Wednesday in connection with an investigation into the murder of journalist Daphne Caruana Galizia, two sources said.

Yorgen Fenech was detained after police intercepted his yacht off the Mediterranean island, sources with knowledge of the matter said.

His arrest came the day after the government said it would offer a pardon to a suspected middleman in the 2017 murder of Caruana Galizia if he provided legal binding evidence of who was behind the killing.

Mr Fenech is a director and co-owner of a business group that won a large energy concession in 2013 from the Maltese state to build a gas power station on the island.

His luxury yacht Gio left the Portomaso yacht marina, five miles (eight km) north of Valletta, shortly before dawn. Police swiftly boarded the vessel and forced it to return to port.