The Malaysian Insider

MUMBAI, Nov 27 - India's financial capital of Mumbai ground to a halt today after at least 101 people were reported killed in blasts and gun attacks across the city yesterday night and gunmen took several dozen hostages at two of the huge city's most popular hotels for Western business travellers and tourists.

Police and gunmen were still exchanging occasional gunfire at Taj Mahal Palace Hotel and Oberoi hotel today morning, according to A.N. Roy, a top police official.

As many as 40 people had been taken hostage at the Taj Mahal Palace Hotel, a witness at the hotel told The Wall Street Journal by telephone.

Noriyuki Kanda, sushi chef at the Wasabi restaurant in the Taj Mahal, said hotel employees told him that gunmen who stormed the hotel lobby last night had taken the group of hostages to the members-only Taj Club, where subsequently an explosion was heard.

This morning, police declared a curfew around the Taj Mahal, and black-clad commandos ran into the building as fresh gunshots rang out from the area, apparently the beginning of an assault on gunmen who had taken hostages in the hotel. Ambulances were seen driving up to the entrance to the hotel.

Indian television later showed several casualties being carried out of the hotel on stretchers to waiting ambulances late this morning, but it wasn't clear who they were or whether hostages or terrorists still remained inside.

Clashes were also reported Thursday morning around Nariman House, an office building in the Colaba district.

Altogether, at least 10 sites, including Mumbai's central railway station, a popular restaurant and a hospital were attacked overnight.

Officials said at least six terrorists had been killed and nine arrested since the attacks began around 9:30 p.m.

Yesterday, Pradeep Indulkar, a senior official at the Maharashtra state Home Ministry said at least 101 people were killed and 287 injured in the attacks. The dead included a number of Indian policemen, including a senior anti-terror officer, and at least six foreigners, including a 38 year-old Japanese businessman, who was killed as he was checking in to the Oberboi Trident Hotel, which adjoins the Oberoi hotel.

Indian television reports said a little-known group called Deccan Mujahideen had sent a letter claiming responsibility for the attacks, but the reports couldn't be confirmed and no other information was immediately available.

India's defence minister has called for a meeting of the chiefs of the armed forces Thursday in the wake of the attacks.

Markets Closed

Meanwhile, Indian equity, commodity, money, bond and foreign exchange markets were all closed Thursday in the aftermath of the attacks and streets of the huge city's business district were largely vacant and residents stayed at home.

A spokesman for the Securities and Exchange Board of India said there will be no trading on the National Stock Exchange and the Bombay Stock Exchange today.

The Reserve Bank of India, the central bank, said: "There will no transactions and settlements in government securities, foreign exchange and money markets" today.

Moody's Investors Service warned that longer-term economic damage was possible unless the government responds swiftly and broadly to the terror challenge.

"The tragic events in Mumbai, if not dealt with swiftly and comprehensively from a political and security standpoint, could result in considerable uncertainty that may cloud the investment outlook," Moody's analyst Aninda Mitra wrote in an email to Dow Jones Newswires.

"In the short term, economic activity in Mumbai could slow a bit as business and tourism flows ebb. But the longer-term outcomes will depend on the government's security policy reactions."

Already, Japanese companies with offices and employees in India were closing offices and postponing business trips.

A spokesman for Nomura Holdings, Inc. in Tokyo said Japan's biggest broker has closed its offices in India on Thursday. Nomura has prohibited staff in the Asia Pacific region from travelling to India. Employees in Japan, the US and Europe have been warned not to make business trips.

The second-biggest brokerage in Japan, Daiwa Securities SMBC Co. Ltd., is raising the bar on travel to India, asking employees to delay or cancel nonessential trips.

Mumbai authorities were taking no chances at luxury hotels that weren't targeted in Last's attack. Mumbai's J.W. Marriott hotel had become a virtual fortress on Thursday morning, with dozens of police deployed behind sandbags around the entrance, and the wrought-iron outer gates shut to non-residents.

Taj Assault

At the Taj Mahal the attacks began with series of explosions last night. Screams were heard and black smoke billowed from the century-old edifice on Mumbai's waterfront.

One guest at the Taj Mahal said first attack began at about 9:45 p.m., when flashing lights and bangs were visible and audible outside the hotel. About 10:20 p.m., there were two loud explosions right outside the hotel, the guest said. "My instant reaction was, "It's a bomb,'" he said.

A hotel representative later phoned, advising guests to remain in their rooms with the lights off and not to open the door until told by security that it was safe to do so.

Kanda, the Taj Mahal's Japanese chef, said he was making sushi at his second floor restaurant when he heard explosions.

"I was working and we heard a lot of noise, I had only heard gunfire on television before so we weren't sure what it was. Then we heard rapid fire like a machine gun and people rushed in from the bar downstairs and said that four men were shooting people in the lobby."

Kanda and the rest of the staff led the customers through the kitchen and the back hallways for employees, some of which were filled with smoke.

Some went back to their rooms; some tried to find the exit. Kanda has been holed up in his room ever since, keeping tabs on the situation through his cell phone because the telephones and television were cut off.

In the morning the power was cut off and he heard explosions again. Outside the hotel, firefighters sprayed water at a fire that raged on its top floor and plucked people from balconies with extension ladders. By this morning, the fire was still burning, but appeared later to be under control.

Attackers Targeted Americans, Britons

The attackers specifically targeted Britons and Americans at the hotel sand at the popular Leopold restaurant, where shots were fired, witnesses said.

Other attacks were reported at a cinema, a hospital and at the main train terminus in the area.

India's NDTV news channel showed several yellow and black rubber dinghies on a beach near the hotels, apparently used by the gunmen to reach the waterfront area near some of the targeted sites. Other local TV reports said Indian police believed at least some terrorists had approached their targets by sea.

Roy, the police official, said police continued to battle the gunmen this morning. "The terrorists have used automatic weapons, and in some places grenades have been lobbed. The encounters are still going on and we are trying to overpower them," Roy said, according to the AP.

In Washington, State Department spokesman Robert Wood said the US is unaware of any American casualties at this point. "We strongly condemn the terrorist attacks" and stand ready to support India, he said.

The attacks come after a series of blasts attributed to Islamist terrorists over the summer and autumn in other cities around India, including the capital, New Delhi.

National security already was expected to be a major electoral issue when the nation goes to the polls early next year; elections must be held before May. The Congress Party, which leads coalition governments at the national level and in Maharashtra state, home to Mumbai, is already facing pressure to do more to staunch terrorism.

Market Impact

The attacks will put further pressure on the battered Indian rupee at a time when foreign fund inflows have dried up amid the escalating global financial crisis. The benchmark Sensex index on the Bombay Stock Exchange, which is in the area where the attacks took place, has fallen more than 50% from its peak as foreign funds pulled out.

The fresh attacks will hurt investors' confidence, Housing Development Finance Corp. Chairman Deepak Parekh said Thursday. "It's terrible. We have to stay calm, but it will hurt investors' confidence," Parekh, who heads India's largest mortgage company by assets, told reporters.

The 105-year-old Taj hotel is one of India's most iconic buildings, commissioned by the Tata family to counter the British colonists' exclusionary "whites only" policy at what was then the city's best hotel, Watson's Hotel. The hotel has been expanded to include a modern tower next to the old hotel. The hotel is owned by Taj Hotels, part of India's leading conglomerate, Tata Group.

Opened in 1903, the Taj Mahal Hotel overlooks the Arabian Sea. The hotel has 565 rooms and is home to some of the city's most exclusive, expensive restaurants as well as the popular Insomnia nightclub. Many dignitaries and celebrities visiting India stay there.

Mumbai is a frequent target of attacks. In March 1993, 13 explosions resulted in 257 deaths and over 700 injuries. The blasts were orchestrated by an organized crime syndicate.

In March 2003, a bomb attack on a commuter train in Mumbai killed 11 people. In August of that year, twin car bombings in Mumbai killed at least 52 people and injured 150. Indian officials blamed a Pakistan-based terror outfit for the crime. In July 2006, seven bomb blasts occurred at various places on the Mumbai Suburban Railway, killing 200 people. -The Wall Street Jounal