Madeleine McCann is "assumed" to be dead, say German prosecutors, who are investigating the disappearance of the British girl in 2007.
A 43-year-old German man is being investigated on suspicion of murder, the public prosecutor added.
The suspect, who has been named in German media as Christian B, is currently serving a prison sentence.
He is believed to have been in the area where Madeleine, aged three, was last seen while on holiday in Portugal.
Police are appealing for the public's help in solving the case, after they initially announced they had a new suspect on Wednesday.
Hans Christian Wolters, from the Braunschweig Public Prosecutor's Office, said in an update on Thursday: "We are assuming that the girl is dead.
"With the suspect, we are talking about a sexual predator who has already been convicted of crimes against little girls and he's already serving a long sentence."
He said the suspect was regularly living in the Algarve between 1995 and 2007 and had jobs in the area, including in catering, but also committed burglaries in hotels and dealt drugs.
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