Commandos battle Islamist gunmen in Mumbai, over 125 dead

Indian commandos fought to end a multiple hostage crisis Thursday in Mumbai, battling Islamist gunmen holding foreign guests in two luxury hotels after attacks across the city left over 125 dead.

Indian Prime Minister Manmohan Singh said the militants had come from "," while the military official leading the operation to flush them out insisted they were from arch-rival Pakistan.

Major General R.K. Hooda told reporters they had "pretended" to be Indian.

Pakistan's defence minister denied any involvement.

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 and blasts continued to be heard from both hotels, where of guests remained trapped in their rooms -- too terrified to move.

According to hospital sources quoted by the Press Trust of India, nine foreign nationals were among the dead -- including a Japanese businessman, an Australian, a Briton, a German and an Italian.

Americans, French, Israelis and Canadians were said to be among those held or .

There was a separate hostage situation at an office-residential complex, housing a Jewish centre where a rabbi and his family were being held by gunmen.

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

Police said the Taj had been cleared of hostages and 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.

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

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.

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

Mumbai police chief Hassan Gafoor said more than 125 people had died. "The situation is very fluid and the toll could rise further," he told AFP.

Nearly 300 people were reported wounded.

The main Bombay Stock Exchange was closed until further notice, as were shops, schools and businesses.

England's abandoned their ongoing one-day series against India.

In a televised address to the nation, 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.

The United States and Britain led , 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 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.