Indian commandos fought to end a multiple hostage crisis on Thursday in Mumbai, battling Islamist gunmen holding foreign guests in two luxury hotels after attacks across the city left over 100 dead.

Indian Prime Minister Manmohan Singh said the militants had come from "outside the country" — a thinly-veiled reference to arch-rival Pakistan.

Police officials said troops were conducting floor-by-floor sweeps of the Taj Mahal and the Oberoi/Trident hotels, nearly 24 hours after gunmen armed with assault rifles and grenades stormed the buildings.

Gunfire continued to be heard from both hotels, where scores of guests remained trapped in their rooms — too terrified to move.

Police said the Taj had been cleared of hostages, and Mumbai police chief Hassan Gafoor told AFP that more than 40 hostages had been rescued from the Oberoi where a large fire had broken out on the upper floors.

At least five gunmen had been shot dead and one captured, police said. Around a dozen security personnel were also killed, including the head of Mumbai's anti-terror squad.

Designed to attract attention

In an audacious operation apparently tailored to gain maximum international attention, the militants had used small groups to attack at least eight other targets in India's financial hub, including the main railway station, a hospital and a restaurant popular with tourists.

Guests who escaped the hotels recounted how the gunmen had specifically tried to round up US and British citizens.

Singh said the attacks were clearly "well-planned and well-orchestrated" and warned "neighbours" who provided a haven to anti-India militants that there would "be a cost' to pay.

An unknown group calling itself the Deccan Mujahedeen claimed responsibility, with one gunman telling an Indian TV channel by phone that the outfit was of Indian origin and motivated by the treatment of Indian Muslims.

"Muslims in India should not be persecuted. We love this as our country but when our mothers and sisters were being killed, where was everybody?" he said.

Some Indian officials pointed a finger at the Pakistan-backed Lashkar-e-Taiba -- best known for an assault on the Indian parliament in 2001. A Lashkar spokesman denied any involvement.

State officials said 101 people were killed in the assaults which began around 10:30 pm (1700 GMT) Wednesday.

Up to 287 other people were also reported wounded.

Nine foreign nationals were among the dead — including a Japanese businessman, an Australian, a German and an Italian — while Americans, French, Israelis and Canadians were said to be among those held or trapped.

City comes to a standstill

The main Bombay Stock Exchange, itself hit by a terror attack in 1993, was closed until further notice, as were shops, schools and businesses.

In the wake of the attacks, England's cricketers also abandoned their tour of India to return home.

Prime Minister Singh said the aim had clearly been to spread panic by choosing high profile targets and "indiscriminately killing foreigners".

Witnesses said the gunmen had been very particular in their choice of hotel hostages.

"They were very young, like boys really, wearing jeans and T-shirts," said one British guest at the Taj, Rakesh Patel, who was among a dozen people herded together by two heavily-armed men and taken to the hotel's upper floors.

"They said they wanted anyone with British and American passports and then they took us up the stairs. I think they wanted to take us to the roof," he said, adding that he and another hostage managed to escape on the 18th floor.

Global condemnation

The United States and Britain led global condemnation, with Washington describing the attacks as "horrific", and US president-elect Barack Obama pledging to work with India to "root out and destroy terrorist networks".

India has witnessed a wave of coordinated attacks in recent months.

Another little-known Islamic group, the Islamic Security Force-Indian Mujahedeen, claimed responsibility for serial blasts last month in India's northeast state of Assam that claimed nearly 80 lives.

Six weeks earlier, the capital New Delhi had been hit by a series of bombs in crowded markets that left more than 20 dead. Those blasts were claimed by a group calling itself the Indian Mujahedeen.

AFP