Gunmen have stormed a popular cafe in the diplomatic area of the Bangladeshi capital, Dhaka, taking a number of hostages, officials say.
Several foreigners are among those being held by eight or nine armed men in the city’s Gulshan district, they add.
A police officer has been killed and at least five others injured in a gun battle, a spokesman said.
So-called Islamic State has said it carried out the attack.
A statement on the group’s self-styled news agency Amaq said militants had attacked a restaurant “frequented by foreigners”.
Police and security forces have sealed off the area and are trying to negotiate the hostages’ release.
“We want to resolve this peacefully. We are trying to talk to the attackers,” said Benazir Ahmed, chief of the Rapid Action Battalion, Bangladesh’s elite police force.
“Our first priority is to save the lives of the people trapped inside.”
Police said the gunmen burst into the Holey Artisan Bakery cafe at about 21:20 (13:20 GMT) and opened fire.
The cafe is described as being popular with expatriates, diplomats and middle-class families.
Media reports quoted witnesses as saying that “Allahu Akbar”, meaning “God is greatest”, was heard as the attack took place.
An eyewitness said she heard a loud noise, followed by continuous gunfire.
“The glass of my drawing room shattered,” Rashila Rahim said.
“My auntie, her daughter and two friends went there for Iftar (breaking of the Ramadan fasting) and they have not come back. We cannot even check where they are.”
Another local resident, Tarique Mir, said he could hear sporadic gunfire nearly three hours after the attack began.
“It is chaos out there. The streets are blocked. There are dozens of police commandos,” he said.
BBC South Asia editor Jill McGivering says that although high-profile gun attacks are rare in Bangladesh, the latest incident follows a series of murders widely blamed on Islamist extremists.