MUMBAI (Reuters) - Commandos took control of Mumbai's Trident-Oberoi hotel on Friday, but battles raged on with militants who were still holed up in another luxury hotel and a Jewish centre with about half a dozen foreign hostages.
"The Oberoi Hotel and Trident are now under our control," the chief of the elite National Security Guards, J.K. Dutt, told reporters in Mumbai. "Oberoi-Trident have been evacuated, we have killed two terrorists."
India again pointed a finger at Pakistani-linked "elements" for Wednesday's brazen, coordinated attacks in its financial capital, which police said killed at least 121 people.
"Preliminary evidence, prima facie evidence, indicates elements with links to Pakistan are involved," Foreign Minister Pranab Mukherjee told a news conference in New Delhi. He urged Pakistan to dismantle the infrastructure that supports militants.
But his Pakistani counterpart, Shah Mehmood Qureshi, called on India not to play politics over the attacks in Mumbai.
"Do not bring politics into this issue. This is a collective issue. We are facing a common enemy and we should join hands to defeat the enemy," the foreign minister told reporters during a visit to Ajmer.
The exchange raised the prospect of renewed tension between the nuclear-armed rivals, which have fought three wars since their independence from Britain in 1947.
After a morning of shooting and explosions in Mumbai, the head of one commando unit flushing out militants at the five-star Taj Mahal hotel said he had seen 12 to 15 bodies in one room among a total of 50 in the hotel.
The commandos found money, ammunition and an identity card from Mauritius that they suspected belonged to the militants, the commander, his face disguised by a black scarf and sunglasses, told a news conference.
At least one militant was still thought to be holding two hostages in the luxury Taj Mahal Hotel, an army commander said.
But army Commander Lieutenant-General N. Thamburaj told reporters almost all guests and staff had been evacuated from the Taj and the operation would be wrapped up in a few hours.
"He is moving in two floors, there is a dance floor area where apparently he has cut off all the lights," he said.
"This morning while carrying out the operation we heard the sound of a lady and a gentleman, so it is possible that this terrorist has got two or more hostages with him."
At the Jewish centre, Indian commandos -- their faces covered by balaclavas -- rappeled from helicopters onto the roof to flush militants there. A Reuters witness said troops fired inside to provide cover as the commandos made at least three sorties.
The gunmen inside are thought to be holding an Israeli rabbi and around three other people hostage there, officials said.
At the Trident-Oberoi Hotel, well-dressed guests, some dragging their suitcases, trickled out and were escorted into waiting buses and cars after a 36-hour siege. One foreign member of the hotel staff left with a baby in his arms.
Mumbai, a city of 18 million, is the nerve-centre of India's growing economic might and home to the "Bollywood" film industry.
Hindu-dominated India, which has a sizeable Muslim minority, has been hit by militant attacks for decades. But this strike seemed aimed at crippling its ability to draw foreign investment.
Australia upgraded its travel warning for India on Friday, telling its nationals to reconsider any plans to go there "because of the very high risk of terrorist activity".
India's main stock markets reopened on Friday after being closed on Thursday due to the attack, but the main share index was up around 0.75 percent at 15:10 p.m.
Prime Minister Manmohan Singh on Thursday pinned blame for the attacks on militant groups based in India's neighbours, usually an allusion to Pakistan.
He warned of "a cost" if these nations did not take action to stop their territory being used to launch such attacks.
An estimated 25 men armed with assault rifles and grenades -- at least some of whom arrived by sea -- had fanned out across Mumbai on Wednesday night to attack sites popular with tourists and businessmen, including the city's top two luxury hotels.
Police said at least seven attackers were killed and nine suspects taken into custody. Twelve policemen were killed, including the chief of Mumbai's anti-terrorist squad.
At least eight foreigners, including one Australian, a Briton, a Canadian, an Italian and a Japanese national, were killed. Scores of others had been trapped in the fighting or held hostage. Police said 279 people were wounded.
The Hindu newspaper said at least three of the attackers taken into custody were members of the Lashkar-e-Taiba group, based in Pakistan.
The group made its name fighting Indian rule in disputed Kashmir, and has been closely linked in the past to the Pakistani military's Inter Services Intelligence agency, the ISI.
Lashkar-e-Taiba has denied any role in the attacks.
Pakistan, condemning the assault, promised full cooperation.
7 months ago