Gunmen attacked a cafe in the embassy district in the Bangladeshi capital, Dhaka, and taking some visitors.
Bangladesh officials said the perpetrators are estimated at eight to nine people. An interim report said they were holding 20 foreigners.
Ambassador of Italy, Mario Palma, said as many as seven people in Italy are believed to be inside the cafe.
Not yet known who the perpetrators of the attacks and hostage-taking. However, ISIS group has claimed the perpetrators were members.
An artificial news agency ISIS, Amaq, call the militia had attacked a restaurant "frequented by foreigners". The statement also said more than 20 people "from different countries" had been killed. However, that claim has not been proven.
The attack on the cafe Holey Artisan Bakery has killed two policemen and wounding 30 others.
"We want to resolve this situation peacefully. We tried to negotiate with the attackers. Our main priority is to save lives of people trapped inside, "said Benazir Ahmed, head of the Rapid Reaction Battalion unity of the elite police Bangladesh.
Statement from the police said the attack began at 21:20 local time, when a man opened fire as he stormed a cafe popular among expats, diplomats, and the middle class, Dhaka City.
Bangladesh media reports quoted witnesses who said she heard the assailants shouting "Allahu Akbar".
An eyewitness said she heard loud noises that followed successive gunshots.
"My aunt, daughter, and two friends went there for iftar and they have not returned. We could not even see if they were there, "said Rahim Rashila.
A local resident, Tarique Mir, said he heard gunshots sporadically three hours after the attack. "It's a mess in there. The roads are blocked and there were dozens of members of the police rapid reaction unit. "
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