Twenty foreigners have been killed by Islamist militants who attacked an upscale cafe in the Bangladeshi capital and held dozens hostage in an hours-long stand-off, before police stormed the building and rescued 13 hostages.
Six gunmen were killed during the police operation and one was captured, Prime Minister Sheikh Hasina said in a TV broadcast on Saturday.
All 20 victims were foreigners, the spokesman for the Bangladesh army said. Colonel Rashidul Hasan said he could not yet confirm the nationalities of those who had died, most of whom were killed by "sharp weapons".
Many people in the expatriate community in Bangladesh work in the country's $US25 billion ($A33.55 billion) garment sector.
The army concluded an operation to clear the cafe after a 12-hour siege that began when gunmen stormed the restaurant on Friday night. Two police were killed in the initial assault.
A search operation was launched as the militants were killed after 12 to 13 minutes of commando operations, Chowdhury said.
The forces found a number of firearms - including pistols, AK-22 rifles and sharp weapons - at the scene.
The 13 hostages rescued included one Japanese and two Sri Lankans, the army said.
One Japanese man was among those rescued and taken to a Dhaka hospital with a gunshot wound, a Japanese government spokesman said. Seven Japanese were unaccounted for.
An unknown number of Italians were among the hostages who were killed, a source at Italy's foreign ministry said on Saturday.
Seven Italians were in the cafe when the attack started, including several working in the garment industry, Italian media have reported.
IS posted photos of what it said were dead foreigners killed in the assault.
Gowher Rizvi, an adviser to Hasina, told Reuters security forces had tried to negotiate with the gunmen.
The hostage crisis began when security guards in the Gulshan district of Dhaka, popular with expatriates, noticed several gunmen outside a medical centre, Rizvi said.
When the guards approached, the gunmen ran into a building housing the restaurant, packed with people waiting for tables, he said.
Ali Arsalan, co-owner of the restaurant, said his staff told him the attackers yelled "Allahu Akbar" (God is Great) as they stormed the building that is split between a bakery and the O'Kitchen Restaurant.
Police said the assailants exchanged sporadic gunfire with police outside for several hours after the gunmen attacked the restaurant around 9pm on Friday.
A police officer at the scene said that when security forces tried to enter the premises at the beginning of the siege they were met with a hail of bullets and grenades that killed at least two of them.
Television footage showed a number of police being led away from the site with blood on their faces and clothes.
A cafe employee who escaped told local television about 20 customers were in the restaurant at the time, most of them foreigners. About 15 to 20 staff were working at the restaurant, the employee said.
The rescued Japanese man was eating dinner with seven other Japanese, all of whom were consultants for Japan's foreign aid agency, the Japanese government spokesman said. He did not know what happened to the others.
