In a massacre incident, heavily armed IS militants attacked Bangladesh's diplomatic zone on Friday night, taking dozens of hostages at a restaurant popular with foreigners.

According to police, security forces have freed 18 hostages, out of which 3 injured women were earlier rushed to hospital. 11 people were killed including two police officers and six gunmen. At least 26 people were wounded in the gun battle as security forces cordoned off the area.

Ambulances and fire engines were kept on standby. Five of the hostages are Japanese.

However, the total number of hostages still remains uncertain. At least nine terrorists shouting "Allahu Akbar" barged into the Holey Artisan Bakery, frequented by diplomats and expatriates, and opened indiscriminate fire at around 9:20 pm on time.

They then engaged in a fierce gun battle with Bangladesh security forces and hurled grenades at them. Two policemen were killed and 30 injured in the exchange.

The deceased policemen have been identified as officer in-charge of nearby Banani police station, Salahuddin Ahmed and Additional Commissioner of Police Rabiul, identified only by his first name.

Police said they have detained two employees of the eatery for questioning. A Bangladeshi man managed to call up his relative and told him to ask police not to fire, as he feared the gunmen would kill them all.

He said there were around 20 foreigners present at the restaurant during the attack.

MEA sources in New Delhi said they were monitoring the situation in Dhaka and trying to ascertain the details.

Bangladesh Prime Minister Sheikh Hasina was in touch with security agencies over the incident. US President Barack Obama has been briefed by his top counter-terrorism official on the attack in Bangladesh, a White House official said.

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BY M. DIVYA SHRI