MUMBAI (Reuters) - Gunmen killed at least 80 people in a series of attacks in India’s financial capital Mumbai and troops began moving into two five-star hotels on Thursday where Western hostages were being held, local television said.

Police said they had shot dead four gunmen and arrested nine suspects.

However, the chief minister of Maharashtra state said the situation was not yet contained.

“The situation is still not under control and we are trying to flush out any more terrorists hiding inside the two hotels,” Vilasrao Deshmukh, Maharashtra’s chief minister, told a news conference.

Gunfire and explosions were heard at the landmark Taj Mahal hotel and thick plumes of smoke rose from the building, witnesses said. There were also explosions at the Oberoi hotel and firing at a hospital where gunmen were surrounded.

“The terrorists are throwing grenades at us from the rooftop of the Taj and trying to stop us from moving in,” Ashok Patil, a police inspector told Reuters.

Police said at least 250 people were wounded in the attacks which also targeted a railway station and the Cafe Leopold, perhaps the most famous restaurant and hang-out for tourists in the city.

An organization calling itself the Deccan Mujahideen said it was behind the attacks, television channels said. The previously little known group sent an email to news organizations claiming responsibility.

“THEY HAD BOMBS”

“I guess they were after foreigners, because they were asking for British or American passports,” said Rakesh Patel, a British witness who lives in Hong Kong and was staying at the Taj Mahal hotel on business. “They had bombs.”

“They came from the restaurant and took us up the stairs,” he told the NDTV news channel, smoke stains covering his face. “Young boys, maybe 20 years old, 25 years old. They had two guns.”

India has suffered a wave of bomb attacks in recent years. Most have been blamed on Islamist militants, although police have also arrested suspected Hindu extremists thought to be behind some of the attacks.

The latest attack, apparently aimed at least partly at prosperous Western tourists, is bound to spook investors in one of Asia’s largest and fastest-growing economies.

Hemant Karkare, the chief of the police anti-terrorist squad in Mumbai, was killed during the attacks, police said.

“We have shot dead four terrorists and managed to arrest nine suspected terrorists,” P.D. Ghadge, a police officer at Mumbai’s central control room, told Reuters.

Japan’s Foreign Ministry said one of its nationals was killed in the Mumbai attacks and one injured.

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TRAPPED HOTEL GUESTS

Mark Abell, a British lawyer, said he had locked himself inside his Oberoi hotel room after hearing two explosions.

Several hundred people had been evacuated from the Taj hotel, one witness said, but many more remained inside, some calling for help from the fifth floor. Firefighters broke windows to reach trapped guests.

“We came down the fire exit, but I think they took some more people, they are trying to get to the roof,” one foreigner told local television. “I think about 15 people (have been taken hostage), about half of them are foreigners..”

In Washington, the White House and U.S. President-elect Barack Obama condemned the attacks, as did France, current president of the European Union, and United Nations Secretary General Ban Ki-moon.

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Indian Home Minister Shivraj Patil said there were around four or five attackers in each of the two hotels.

“They have attacked hotels, they have attacked the hospitals, they have attacked the railway station,” he said.

KOREANS, EUROPEANS CAUGHT UP IN ATTACKS

A driver told Reuters at least 50 Koreans were stuck inside the Taj with their drivers waiting outside.

“We were just getting ready to pick them up, when we heard the first blast, police did not let us get past and they (the Koreans) are not answering the phones,” Deepak Aswar, the driver said.

Europeans were also caught up in the attacks.

“I was in the restaurant inside Oberoi and I saw this series of gunshots and death which I don’t want to see again,” a Spaniard who declined to give his name told Reuters.

“I crawled out into the kitchen and waited there, until I sensed it was all quiet and seemed over.”

Maharashtra state police chief A.N. Roy said attackers had fired automatic weapons indiscriminately, and used grenades, adding that they were still holed up in some buildings.