Bangladeshi police have stormed a restaurant in the capital, Dhaka, to free 20 hostages, including several foreigners, who were trapped inside after gunmen launched an attack.
"Our commandos have stormed into the restaurant. Intense gunfighting on," Mizanur Rahman Bhuiyan, a deputy director at the Rapid Action Battalion force, told Reuters news agency on Saturday.
The Islamic State of Iraq and the Levant (ISIL, also known as ISIS) group has claimed responsibility for the attack. The group posted photos of what it said were dead foreigners killed in the assault on the cafe, where police believe eight or nine gunmen are holed up armed with assault rifles and grenades.
ISIL said 24 people had died. Bangladeshi police denied that, saying two police officers had been killed and at least 20 people were wounded.
Gowher Rizvi, an adviser to Bangladesh Prime Minister Sheikh Hasina, told Reuters security forces had tried to negotiate a way out of the crisis.
Police said the gunmen attacked the upscale Holey Artisan restaurant in the Gulshan district of Dhaka, popular with expatriates, in an assault that began around 9pm local time on Friday.
The assailants exchanged sporadic gunfire with police outside for several hours, said Bhuiyan.
Italian and Indian nationals are among the hostages, said a duty officer at Rapid Action Battalion's control room.
Italy's ambassador to Bangladesh, Mario Palma, told Italian state TV seven Italians were among the hostages.
"It is a suicide attack. They want to carry out a powerful and bloody operation and there is no room for negotiation," Palma said.
The hostage crisis marks an escalation from a recent spate of murders claimed by ISIL and al-Qaeda on liberals, gays, foreigners and religious minorities, and could deal a major blow to the country's vital $25bn garment sector.
Last year, several Western retailers temporarily halted visits to Dhaka following the killing of two foreigners.
Violence has spiked in Bangladesh in the last 18 months. Attacks have tended to be on individuals, often using machetes, and the raid on the restaurant was a rare instance of a more coordinated operation.
The assailants exchanged sporadic gunfire with police outside for several hours, said Bhuiyan.
Italian and Indian nationals are among the hostages, said a duty officer at Rapid Action Battalion's control room.
Italy's ambassador to Bangladesh, Mario Palma, told Italian state TV seven Italians were among the hostages.
"It is a suicide attack. They want to carry out a powerful and bloody operation and there is no room for negotiation," Palma said.
The hostage crisis marks an escalation from a recent spate of murders claimed by ISIL and al-Qaeda on liberals, gays, foreigners and religious minorities, and could deal a major blow to the country's vital $25bn garment sector.
Last year, several Western retailers temporarily halted visits to Dhaka following the killing of two foreigners.
Violence has spiked in Bangladesh in the last 18 months. Attacks have tended to be on individuals, often using machetes, and the raid on the restaurant was a rare instance of a more coordinated operation.
Earlier on Friday, a Hindu priest was hacked to death at a temple in Jhinaidah district, 300km southwest of Dhaka.
Rizvi, the Bangladesh prime minister's adviser, said the hostage crisis began when local security guards in the diplomatic enclave noticed several gunmen outside a medical centre.
When the guards approached, the gunmen ran into the restaurant, which was packed with people waiting for tables, he added.
An employee who escaped told local television about 20 customers were in the restaurant at the time, most of them foreigners. The restaurant has a seating capacity of about 25 people.
Some 15 to 20 staff were working at the restaurant at the time, the employee said.
A police officer at the scene said when security forces tried to enter the premises at the beginning of the siege they met a hail of bullets and grenades.
Television footage showed a number of police being led away from the site with blood on their faces and clothes.