Islamic State terrorists stormed a crowded restaurant in Dhaka's high-security Gulshan diplomatic area and took hostage at least 20 people including foreigners, triggering a fierce gunbattle with Bangladesh security forces in which two policemen were killed and 30 injured.
At least nine terrorists shouting "Allahu Akbar" barged into the Holey Artisan Bakery, frequented by diplomats and expatriates, and opened indiscriminate fire at around 9:20 PM (local time) on Friday.
Islamic State group claimed responsibility for the attack through its Amaq news agency, nearly four hours after the hostage crisis unfolded.
Amaq also claimed that 20 people had been killed in the attack.
Local media reports, meanwhile, said that the father of a teenage Indian girl, who was among the hostages, urged authorities to expedite negotiations for her safe release.
Two persons -- an Argentine national and a Bangladeshi-- who had taken refuge in a nearby house when the gunmen entered the restaurant, were rescued by police.
Police also said they have detained two employees of the restaurant for questioning.
Several foreigners, including Italians and Japanese, were feared to have been taken hostage along with locals inside the restaurant, they said.
However, the total number of hostages still remains uncertain.
A large number of policemen and personnel from the RAB, paramilitary and Border Guards of Bangladesh (BGB) have cordoned off the area and surrounded the restaurant. Security personnel were seen warding off people crowding the cordon.
"Our commandos have stormed into the restaurant. Intense gun fighting on," Mizanur Rahman Bhuiyan, a deputy director at the Rapid Action Battalion force, told the Reuters news agency. At least eight hostages have been successfully rescued while some sources says the number of those freed could be 12.
Navy commandos along with Air force and Army have been kept on standby, as negotiations are underway, official sources said.
"We are trying to negotiate with the gunmen holed up inside the restaurant. Efforts are still under way to contact the gunmen with an aim to rescue the hostages without loss of life," Rapid Action Battalion (RAB) chief Benazir Ahmed told newsmen. "Our first priority is to save the lives of the people trapped inside."
When security forces tried to enter the building, the gunmen hurled grenades at them, resulting in injuries to around 30 people and policemen.
The officer in-charge of nearby Banani police station, Salahuddin Ahmed and Additional Commissioner of Police Rabiul, identified only by his first name, succumbed to their injuries.
Several people are said to be critically wounded.
Gunshots and explosions were heard intermittently near the restaurant.