MUMBAI (Reuters) - At least 86 people were killed in attacks by gunmen in India's commercial hub Mumbai and security forces began moving on two luxury hotels where foreign hostages were being held, officials and witnesses said on Thursday.
The attacks by small groups of gunmen armed with automatic weapons and grenades on the hotels and other sites in the city came amid state elections, including in Kashmir, and risk destabilizing the country ahead of national elections next year.
Police said they had shot dead four gunmen and arrested nine suspects. They said 12 police were killed, including Hemant Karkare, the chief of the police anti-terrorist squad in Mumbai.
"The situation is still not under control and we are trying to flush out any more terrorists hiding inside the two hotels," said Vilasrao Deshmukh, Maharashtra state chief minister.
Deshmukh told a news conference the situation was not yet contained.
"It is very difficult to say how many terrorists are holed up in the two hotels," he added, although Indian Home Minister Shivraj Patil earlier said there were around four or five attackers in each.
"We have shot dead four terrorists and managed to arrest nine suspected terrorists," P.D. Ghadge, a police officer at Mumbai's central control room, told Reuters.
A Reuters witness said that hours after the assaults began the Taj Hotel was surrounded by police, with fresh firing heard and a floodlight scanning its exterior. A fire in the hotel was still not under control.
Japan's foreign ministry said at least one Japanese national had been killed and one injured in the attacks, while South Korea said 26 of its nationals had escaped unharmed.
Gunfire and explosions were heard at the landmark Taj Mahal hotel and thick plumes of smoke rose from the building, witnesses said. Staff and guests were seen running out of the lobby.
There were also explosions at the Oberoi hotel and firing at a hospital where gunmen were surrounded.
Security forces were seen moving into the hotels.
"The terrorists are throwing grenades at us from the rooftop of the Taj and trying to stop us from moving in," Ashok Patil, a police inspector, told Reuters.
Police said at least 250 people were wounded in the attacks which also targeted a railway station and the Cafe Leopold, perhaps the most famous restaurant and hang-out for tourists in the city.
An organization calling itself the Deccan Mujahideen said it was behind the attacks, television channels said. The previously little known group sent an email to news organizations claiming responsibility.
"THEY HAD BOMBS"
"I guess they were after foreigners, because they were asking for British or American passports," said Rakesh Patel, a British witness who lives in Hong Kong and was staying at the Taj Mahal hotel on business. "They had bombs."
"They came from the restaurant and took us up the stairs," he told the NDTV news channel, smoke stains covering his face. "Young boys, maybe 20 years old, 25 years old. They had two guns."
India has suffered a wave of bomb attacks in recent years. Most have been blamed on Islamist militants, although police have also arrested suspected Hindu extremists thought to be behind some of the attacks.
The Mumbai attacks are bound to spook investors in one of Asia's largest and fastest-growing economies.
"It is the highest profile, boldest attack we have seen in some time," said Bruce McIndoe, a travel security expert and President of iJET Intelligent Risk Systems, a private intelligence firm.
Mark Abell, a British lawyer, said he had locked himself inside his Oberoi hotel room after hearing two explosions.
Several hundred people had been evacuated from the Taj hotel, one witness said, but many more remained inside, some calling for help from the fifth floor. Firefighters broke windows to reach trapped guests.
"We came down the fire exit, but I think they took some more people, they are trying to get to the roof," one foreigner told local television. "I think about 15 people (have been taken hostage), about half of them are foreigners.."
"I was in the restaurant inside Oberoi and I saw this series of gunshots and death which I don't want to see again," a Spaniard who declined to give his name told Reuters.
"I crawled out into the kitchen and waited there, until I sensed it was all quiet and seemed over."
In Washington, the White House and U.S. President-elect Barack Obama condemned the attacks, as did France, current president of the European Union, and United Nations Secretary General Ban Ki-moon.
The White House convened counterterrorism, intelligence and defense officials over the attacks and the U.S. government offered assistance to Indian authorities.
Australia's foreign ministry told the country's citizens they should avoid travel to Mumbai and those already there should remain in a safe location and follow the advice of local authorities.
(Reporting by New Delhi and Mumbai bureaux; Writing by Simon Denyer and Jerry Norton; Editing by Paul Tait)