Correct Answer: breaking

Solution : The second option is the correct answer.

In the context of time, breaking often refers to the beginning of daylight, especially at sunrise. Dawn breaking signifies the start of a new day, making it suitable in this sentence.

The meanings of the other options are as follows:

• Closing refers to the end or conclusion of something, like a store closing.
• Arriving implies reaching a destination.
• Coming refers to approaching or moving towards a place.

Therefore, the complete sentence is: "Dawn was just breaking when we spotted the ship."