A source close to the investigation told Reuters the owner of the car, who was found dead at the wheel, was an Iraqi-born Briton called Saad al-Hilli from Surrey in southern England.

A girl of about four was found alive and unhurt on the floor of the BMW car and rushed to hospital in the nearby city of Grenoble, where a second girl of about eight, thought to be her sister, had been rushed from the scene eight hours earlier with serious head injuries.

The English-speaking girl was discovered around midnight on Wednesday, huddled between the front and back seats of the British-registered BMW, under the legs of two dead women thought to be her mother and grandmother, a public prosecutor said.

A man who appeared to be a local cyclist was also found shot dead at the scene, near the village of Chevaline, close to the picturesque Annecy lake and the Swiss border.

Apparently too scared to move, the little girl went unnoticed by police for some eight hours until investigators finally opened the doors of the car, standing on a forest road near Lake Annecy, to begin a close forensic inspection.

"She's clearly shocked but she's doing okay. She's not injured," Annecy prosecutor Eric Maillaud told reporters in a late-night briefing. He was due to give an update at 2 p.m. (1200 GMT).

"She started smiling and speaking English as soon as a gendarme from the Chambery search brigade took her in his arms and got her out of the car," Maillaud said.

The girl of around eight had been beaten on the head.

"She was struck very violently and apparently has skull fractures," said Maillaud, who said her condition was stable.

Around 15 bullet casings from an automatic weapon were found at the scene, local media reported.

Police who arrived at the crime scene at about 4 p.m. (1400 GMT) on Wednesday did not spot the little girl at first because they were awaiting the arrival of forensic experts from Paris before opening the car doors. (Additional reporting by Catherine Lagrange in Lyon; Writing by Brian Love; Editing by Louise Ireland and Kevin Liffey)

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