(Updates death toll, adds details)

BEIJING, May 6 (Reuters) - An explosion in a northern Chinese coal mine that was operating illegally has killed 20, the latest tragedy to hit the world's deadliest mining industry, the official Xinhua news agency said on Sunday.

Rescuers were still hunting for 10 missing men late on Sunday but thick smoke hampered their efforts. Some 125 miners were underground on Saturday afternoon when the blast ripped through the shafts, but 95 escaped.

The Pudeng mine near Linfen, one of China's most polluted cities, had been ordered to halt production but restarted work without permits, the report said.

Police have the mine owner and several managers under surveillance and are investigating the cause of the blast, Xinhua added. Earlier reports had said the mine was operating legally.

"The coal mine was in a mess and under poor management," Xinhua quoted the Provincial Bureau of Work Safety saying. The miners who were underground at the time of the explosion worked for five different contractors, it added.

Coal seams in the area often have high levels of methane gas which must be pumped out for safe mining.

Last year 4,746 people were killed by explosions, floods and other accidents in China's mines, as owners pushed production beyond safe limits to chase profits and meet the country's surging appetite for fuel.

Beijing has repeatedly pledged to crack down and clean up the industry, but local officials often have ties to mines, hampering such efforts, and closed mines often reopen without permits.

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