Islamic State (Isis) fighters have launched a surprise attack on Iraq's northern city of Kirkuk, a major oil production centre.

Isis fighters have captured land and villages to the south-west of the city, killing several peshmerga including a senior officer, according to local reports.

The attack is believed to have come from three sides, with jihadists taking advantage of a dense fog to attack Kurdish positions overnight. Also, a suicide attack in the city centre has reportedly killed peshmerga general Shirko Rauf, brigade commander of the Kurdish forces in the city.

Five other members of the Kurdish peshmerga forces were killed in clashes, while 46 more were wounded, according to AFP.

Meanwhile, a few Isis fighters, some say a dozen, have reportedly broken into Kirkuk Palace hotel and established a foothold there. They are reportedly trapped by peshmerga forces and the clashes are ongoing.

A curfew has been imposed from 10 am in the city after the attack.

The militants have also captured Sayyid Ali Bridge and part of the nearby Khabaza gas field, according to some reports.

Update: A video has emerged online showing Peshmerga forces firing victory shots from the top of the Palace Hotel after re-capturing the building: