Police say they're closing in on Pearl kidnappers

A photo of Daniel Pearl accompanied an e-mail from his abductors nearly a week ago.

KARACHI, Pakistan (CNN) -- Two weeks after Wall Street Journal reporter Daniel Pearl disappeared on the way to an interview with a Muslim fundamentalist, Karachi police Wednesday said they are closing in on his kidnappers.

According to sources close to the investigation, Tuesday night police arrested three men, at least two of them near Karachi airport. All three men have been linked to a computer from which e-mails including photographs of Pearl were sent. The three are identified only by the names of Fahd, Adil and Salman.

According to a source, one of the men arrested has confessed to receiving an e-mail from Sheikh Omar Saeed -- a young Pakistani militant with a British passport -- who was freed by India December 31, 1999, to end the hijacking of an Indian Airlines flight.

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Saeed remains at large along with a second, unnamed, key suspect, the U.S. officials said.

The officials have said they believe Saeed is the ringleader of the kidnapping, based upon information obtained from suspects brought in for questioning since the weekend.

Saeed's alleged involvement opens the possibility that two militant Pakistani groups are also involved -- Harakat ul-Mujahedeen (HUM) and the more radical Jaish-e-Mohammed (JEM).

Both groups are believed to have ties to Osama bin Laden's al Qaeda network. Indian officials have linked JEM to a recent attack on the Indian parliament, and President Bush denounced JEM by name as a terrorist group in his recent State of the Union address.

The groups have been active in Pakistan, focusing on the disputed territory of Kashmir.

A spokesman for Harakat ul-Mujahedeen has denied any link to the kidnapping.

In Washington, U.S. officials said Tuesday that key arrests had been made in Pakistan by authorities investigating the kidnapping of Pearl, 38, and they are hopeful the American correspondent will be found alive.

"We are very optimistic," one senior State Department official told CNN. "We think he's still alive."

"We're better able now to clarify who's on first, who's on second," this official added.

That assessment was echoed by Pearl's employer, the Wall Street Journal.

Saeed was one of three men freed from an Indian prison to end the airline hijacking on the last day of 1999.

The Indian Airlines Airbus with 178 passengers and crew members was hijacked while flying from Katmandu, Nepal, to New Delhi. The ordeal lasted eight days, with the flight eventually landing in Kandahar, Afghanistan.

The plane's captain said the hijackers praised bin Laden over the jet's speaker system.

The hijackers demanded the release of Saeed and two others who were being detained for activities in Kashmir. After their release, the passengers and crew were released almost immediately.

-- CNN Correspondents Ben Wedeman and Andrea Koppel contributed to this report.