At least eight civilians have been confirmed dead in an attack by militants on a hotel in the Somali capital Mogadishu, an official said Saturday, as security forces continued to battle gunmen holed up inside.

Militants from Al-Qaeda-linked Al-Shabaab group stormed the popular Hayat Hotel on Friday evening in a hail of gunfire and bomb blasts.

Periodical gunfire and loud explosions could still be heard early Saturday, many hours after the start of the attack.

It is the biggest attack in Mogadishu since Somalia's new President, Hassan Sheikh Mohamud, was elected in May after many months of political instability.

Al-Shabaab, which has been waging a deadly insurgency against Somalia's central government for about 15 years, claimed responsibility.

According to security Commander Mohamed Abdikadir, "The security forces continued to neutralise terrorists who have been cordoned inside a room in the hotel building; most of the people were rescued but at least eight civilians were confirmed dead so far."

"The security forces rescued dozens of civilians including children who were trapped in the building safely," he told AFP.

Witnesses reported at least two large explosions as the gunmen stormed the hotel, which is a popular spot frequented by government officials and ordinary Somalis.

Police Spokesperson Abdifatah Adan Hassan had told reporters late Friday that the initial blast was caused by a suicide bomber who attacked the hotel with several other gunmen.

Witnesses said a second blast occurred just a few minutes later, inflicting casualties on rescuers and members of the security forces and civilians who rushed to the scene after the first explosion.

Al-Shabaab claimed responsibility

The militants claimed responsibility for the attack in a brief statement on a pro-Shabaab website.

"A group of Al-Shabaab attackers forcibly entered Hotel Hayat in Mogadishu, the fighters are carrying out random shooting inside the hotel," the group said.

Earlier this week, the United States claimed that its forces had killed 13 Al-Shabaab fighters in an airstrike in the central-southern part of the country.

In recent weeks, Al-Shabaab militants have also launched attacks on the Somalia-Ethiopia border.

Somalia's new President Mohamud said last month that ending Al-Shabaab's insurgency required more than a military approach, but that his government would negotiate with the group only when the time was right.

Al-Shabaab militants were driven out of the capital in 2011 by an African Union force, but the group still controls swathes of countryside. It continues to launch deadly strikes on civilian and military targets, with popular hotels and restaurants frequently hit.

Earlier this month, new Prime Minister Hamza Abdi Barre announced the appointment of the group's former deputy leader and spokesperson, Muktar Robow, as religion minister.

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