MUMBAI (Reuters) - Indian commandos fought to regain control of Mumbai on Friday, more than 24 hours after heavily armed militants killed at least 119 people and wounded more than 300 others in coordinated attacks in the commercial capital.
Prime Minister Manmohan Singh pinned blame for the attacks on militant groups based in India's neighbors -- usually an allusion to Pakistan -- raising prospects of renewed tension between the nuclear-armed rivals.
He warned of "a cost" if these nations did not take action to stop their territory being used to launch such attacks.
An estimated 25 men armed with assault rifles and grenades -- at least some of whom arrived by sea -- fanned out across Mumbai on Wednesday night to attack sites popular with tourists and businessmen, including the city's top two luxury hotels.
At least six foreigners, including one Australian, a Briton, an Italian and a Japanese national, were killed. Scores of others were trapped in the fighting or were being held hostage.
Commandos battled the militants through Thursday -- often room to room in the hotels -- to rescue people, police said. Flames billowed out of the buildings and loud explosions were heard during the fighting.
Dipak Dutta told NDTV news after being rescued at the Taj Mahal hotel that he had been told by troops escorting him through the corridors not to look down at any of the bodies.
"A lot of chef trainees were massacred in the kitchen," he said.
The city of nearly 18 million people, the nerve-center of India's growing economic prowess and home to the "Bollywood" film industry, was virtually shut down on Thursday as the battles raged.
Sporadic gunfire and explosions could be heard early on Friday, and authorities said at least one militant was still holed up in the Taj Mahal hotel and several more in the nearby Oberoi-Trident hotel. Many staff and guests were also trapped, but it was not clear how many.
"It is evident that the group which carried out these attacks, based outside the country, had come with single-minded determination to create havoc in the commercial capital of the country," Prime Minister Singh said in a televised address.
"We will take up strongly with our neighbors that the use of their territory for launching attacks on us will not be tolerated, and that there would be a cost if suitable measures are not taken by them."
Pakistan, condemning the assault, promised full cooperation.
Hindu-dominated India, which has a sizeable Muslim minority, has been hit by militant attacks for decades. But this strike appeared aimed at crippling its ability to attract foreign investment.
The militants appeared to specifically target Britons, Americans and Israelis, witnesses said.
British Prime Minister Gordon Brown said the attack would be met with a "vigorous response."
U.S. President-elect Barack Obama condemned the incident. Obama, who favors a regional solution to the war in Afghanistan and is encouraging Pakistan and India to make peace over Kashmir, was monitoring the situation closely, an aide said.
The Times of India published a photograph of one of the attackers, dressed in a black T-shirt and holding an assault rifle with a backpack over his shoulder.
At least some of them had come ashore in what police said was a rubber dinghy. They commandeered a vehicle and sprayed passersby with bullets, fired indiscriminately in a train station, hospitals and a popular tourist cafe.
Police said at least seven of the attackers were killed and nine suspects had been taken into custody. They said 12 policemen were killed, including Hemant Karkare, chief of the police anti-terrorist squad in Mumbai.
"The situation is still not under control and we are trying to flush out any more terrorists hiding inside the two hotels," said Vilasrao Deshmukh, chief minister of Maharashtra state which is home to Mumbai.
The death toll was only an estimate in an attack which brought the biggest chaos to the city since serial bombings in 1993 killed 260 people and injured hundreds.
India blamed the city's Muslim crime syndicates for that attack and saw it as revenge for deaths of Muslims in Hindu-Muslim violence which followed the destruction of a mosque in the north of the country. It said the perpetrators had later found refuge in Islamic Pakistan.
One of the sites attacked was a Jewish center. At least 10 Israeli nationals were trapped in buildings or held hostage, an Israeli embassy official in New Delhi said.
A militant holed up at the center phoned an Indian television channel to offer talks with the government for the hostages' release. He complained of abuses in Muslim-dominated Kashmir, over which India and Pakistan have fought two of their three wars.
Reporting by New Delhi and Mumbai bureaux; Writing by Raju Gopalakrishnan; Editing by Richard Balmforth