The paper said investigators believe a huge quantity of jet fuel may have leaked from the engine on the right wing and flowed to the other side of the aircraft.
"From the size and intensity of the fire, we may be looking at a very large fuel leak,'' said Hiromi Tsurumi, a spokesman for Japan's Aircraft and Railway Accidents Investigation Commission.
Japanese media reports said damage to the pylon connecting the engine to the wing could have punctured a pipe, causing fuel to rush into the engine and ignite.
The pylon contains a pipe supplying fuel to the engine from three tanks, located inside the two wings and under the fuselage.
World's best-selling commercial jet
First entered service in 1968
On average 1,544 737s are airborne at any single point in time
More than 5,400 737s delivered since launch.
First 737-800 model delivered in 1998
All 737-800s use same CFM-56 engines
About 1,220 737-800s flying worldwide
Investigators are also examining the possibility that loose parts may have been sucked into the engine, damaging the fuel pipe.
A joint investigation by officials from Japan, Taiwan and the US was due to formally open on Wednesday, with aircraft maker Boeing also sending a representative.
Japanese TV has shown footage of Zhao Guo-shi, the head of China Airlines, meeting some of the tourists from the burned-out jet to apologise for the accident.
The tourists later said they had been given red envelopes containing $100 in compensation, although at least one woman complained that the money was not enough to cover her luggage destroyed in the fire.
The airline also published an apology in major Japanese newspapers on Wednesday.
The fire is a blow to China Airlines which has been trying to shake off a poor safety record caused by a series of accidents in the 1990s and 2002.
On Wednesday the tail fin of the wrecked aircraft, showing China Airline's trademark plum blossom logo, was covered over reportedly due to concerns about the image problem.
|All passengers and crew escaped before the fire took hold [Reuters]|