DHAKA: Gunmen stormed a restaurant popular with expatriates in the diplomatic quarter of the Bangladeshi capital on Friday night and took about 20 people hostage, including several foreigners, in an attack claimed by Islamic State.

The Islamist militant group said more than 20 people had been killed, although police have so far confirmed the deaths of two policemen.

In the latest flare-up of Islamist militant violence to hit the South Asian nation, police said eight to nine gunmen attacked the Holey Artisan restaurant in the upscale Gulshan area of Dhaka.

The assailants, believed to be carrying assault rifles and grenades, exchanged sporadic fire with police outside, hours after the attack began around 9 p.m. local time.

Two police officials died in the attack and at least 15 people were injured, police said. A duty officer at the Rapid Action Battalion's control room in Dhaka said the gun battles had stopped and the hostages were unharmed.

DHAKA: Gunmen attacked a restaurant popular with foreigners in the diplomatic quarter of the Bangladeshi capital on Friday and the US State department said there was a hostage situation.

Three policemen were wounded by gunfire that erupted as police surrounded the Holey Artisan restaurant in the upscale Gulshan area of Dhaka, a police officer said.

He said there were foreigners inside the restaurant and that police were preparing a plan to enter the premises.

The US State Department said on Twitter that there was a hostage situation in the diplomatic enclave of Dhaka.

Speaking from his house in the area, a witness said he could hear gunfire and that the situation "looked quite bad".

A series of deadly attacks, mostly using machetes rather than guns, have targeted bloggers, atheists and religious minorities in Bangladesh in recent months.