Dhaka bakery attack
Several people have been taken hostage after an attack by armed gunmen at a Dhaka restaurantTwitter

At least twenty people have been taken hostage by armed gunmen at a restaurant in the diplomatic enclave of Bangladesh's capital, Dhaka. Two police officers have been killed and thirty more injured in a gun battle, after nine attackers, armed with firearms and bombs sieged the Holey Artisan Bakery at around 9:20pm local time, taking customers and staff hostage at gunpoint.

Terrorist group Islamic State (Isis) has claimed responsibility for the attack. A statement on the group's self-styled news agency Amaq said: "Islamic State commandos attack a restaurant frequented by foreigners in the city of Dhaka," AFP reports. It further claimed that "more than 20 people of different nationalities (were) killed".

Bangladesh's police chief has confirmed that several foreigners are among the hostages, however there have been no official reports of fatalities among those held captive.

As police surrounded the restaurant in the upmarket Gulshan area, a gun battle ensued which left three officers wounded. The attackers, believed to be in their early 20s, are reported to have thrown home-made grenades at the police as they exchanged gunfire.

According to a Bangladeshi TV station, eyewitnesses at the scene reported that the gunmen chanted "Allahu Akbar" as they entered the bakery.

The restaurant's supervisor Sumon Reza, who leaped from the roof of the building to escape, said there were up to 20 people being held hostage in the restaurant.

A staff worker atthe restaurant told Bangladeshi newspaper The Daily Star: "They blasted several crude bombs, causing wide-scale panic among everyone.'I managed to flee during this confusion. They came armed with pistols, swords and bombs. They shouted Allahu Akbar [God is great] before blasting the bombs."

A spokesman for the US State Department said that all Americans working at the US mission in Dhaka, which is one mile from the scene of the shooting, have been accounted for, but urged citizens to shelter in place, Sky News reports.

Following reports that several Italian citizens were among the hostages, Italy's Foreign Minister Paolo Gentiloni said on Twitter he was closely following the situation in Dhaka, adding he was "anxious for Italians involved" and expressing solidarity with their families.

Prime Minister Matteo Renzi abruptly left a ceremony at the Colosseum in Rome on Friday evening to follow the incident.

One of the officers killed in the attack has been identified as local police station chief, Mohammed Salahuddin, The Guardian reports.

Dhaka restaurant shooting
Bangladeshi forces stand guard near a restaurant that has been attacked by unidentified gunmen in Dhaka, BangladeshAFP/Getty

Police official Gen. Benzir Ahmed told the BBC: "Police and security forces have sealed off the area and are trying to negotiate the hostages's release. Some derailed youths have entered the restaurant and launched the attack."

"We want to resolve this peacefully. We are trying to talk to the attackers... Our first priority is to save the lives of the people trapped inside."

The attack comes on the same day a Hindu priest was hacked to death at his temple in Bangladesh's southwestern district of Jhenaidah early Friday, police said. There have been a string of recent attacks on religious minorities and secular activists by suspected Islamist militants in the country.

The hostage situation is "still fluid" police report.

The White House says that President Barack Obama has been briefed on the situation, and has asked to be kept informed of developments.

More follows...