Gunmen stormed the Westgate mall in Kenya's capital Nairobi on Saturday killing at least 20 people and wounding 50 others.
Sporadic gun shots could be heard hours after the assault started as police helicopters hovered above the mall and security forces cordoned off the area.
Soldiers and police surrounded the mall and combed the building, hunting down the attackers shop by shop. Some local television stations reported hostages had been taken, but there was no official confirmation.
The Somali militant group al-Shebab, which Kenya blames for shootings, bombings and grenade attacks against churches and the security forces, had threatened before to strike the Westgate mall, popular with the city's expatriate community. The chain of attacks follows action by Kenyan forces against al-Qaeda-linked militants in Somalia two years ago.
Some eyewitnesses said they saw about five armed assailants storm the beige stone Westgate shopping mall and that the incident appeared to be an attack rather than an armed robbery.
Kenya's Ministry of Interior said: "There is a possibility that it is an attack by terrorists, so we are treating the matter very seriously."
At least two dozen wounded were wheeled out on stretchers and shopping trolleys. Many of the victims had multiple light wounds, apparently from flying debris. Other walked out, some with bloodied clothing wrapped around wounds.
The Kenyan Red Cross said at least 15 had been killed and more casualties were still inside the complex.
"The casualties are many, and that's only what we have on the outside," Kenya Red Cross Society Secretary General Abbas Guled said. "Inside there are even more casualties and shooting is still going on."
Al-Shebab have previously threatened to launch strikes on Nairobi's tower blocks and soft targets including nightclubs and hotels known to be popular with Westerners in the capital. But they have so far failed to carry out such an attack.
RA/HH