MOGADISHU - Fighters from Somali Islamist group al Shabaab set off a car bomb next to a hotel in the capital and said its fighters stormed the building.
Residents said a large plume of smoke rose above the seaside city.
A police officer said the car bomb struck the gate of a park behind the hotel in Mogadishu, and most people escaped through another gate.
Police Major Ahmad Ismail told Reuters it was not clear if the fighters were inside the hotel and did not say if there were any casualties.
"I heard an exchange of gunfire around the area. I am not sure whether or not the attackers are in the hotel," he said.
Al Shabaab has often launches attacks in Mogadishu on a Friday - the Somali weekend - when more people visit hotels and restaurants.
Residents reported gunfire after the blast.
"We started with a car bomb and then stormed the hotel. We are inside it and fighting continues," al Shabaab's military operations spokesman, Sheikh Abdiasis Abu Musab, said.
He said it was the Somali Youth League hotel, known as the SYL hotel.