Updated at 4:45 p.m. EST.
Insurgents struck Friday at hotels in the heart of Kabul with suicide attackers and a car bomb, killing at least 16 people half of them foreigners in an assault that showed the militants remain a potent force despite setbacks on the battlefield and the arrest of more than a dozen key leaders.
The Taliban claimed responsibility for the attacks, which President Hamid Karzai said targeted Indians working in Kabul.
At least six of the dead were Indian citizens, including some government officials, Indian authorities said. The Taliban have long opposed India's involvement in Afghanistan and its ties to an Afghan group that helped the U.S. oust the Islamist regime in late 2001.
The four-hour assault began about 6:30 a.m. with a car bombing that leveled a residential hotel used by Indian doctors.
CBS News correspondent Mandy Clark reports the initial explosion sparked a gun battle, during which some of the residents trapped in the guest houses were seen jumping from windows to escape the shooting.
A French filmmaker and an Italian diplomat also were killed, their governments said. The Kabul police chief said the Italian, Pietro Antonio Colazzo, died a hero, slain by the Taliban when they found he was phoning tips to police from inside his hotel where attackers were holed up.
Italy's news agency ANSA said Colazzo was deputy chief of the Kabul office of the Italian foreign intelligence agency and had been in the country for about two years. Police said three attackers died in addition to the 16 victims.
The attacks follow a string of setbacks suffered by the Taliban, who have all but lost control of a major southern stronghold of Marjah in a major offensive by thousands of U.S., Afghan and NATO troops. The British government said it lost a soldier Friday in an explosion during a foot patrol the 14th NATO service member to die in the operation.
Furthermore, more than two dozen senior and midlevel Taliban figures have been detained in Pakistan in recent weeks. That suggests the attacks in Kabul were a way for the Taliban to show that they remain a threat, capable of striking even in the center of the Afghan capital.
"Yesterday, the U.S. was showing to the world `See we are raising the flag in Marjah and isolating the Taliban,"' said Kabul political analyst Wahid Mazhda. "The Taliban once again is showing its power, saying `We are still active."'
The four-hour assault began at about 6:30 a.m. when a car bomb devastated a residential hotel used by Indian doctors working at an Indian government-sponsored health center. Soon after, a suicide attacker detonated his explosives outside the demolished hotel.
As police arrived, two attackers toting a rocket-propelled grenade launcher and rifles ran into the Park Residence, the nearby hotel where the Italian was staying. Police surrounded it, trading gunfire with the insurgents holed up there.
One attacker blew himself up, killing three policemen and wounding six when police stormed the building, officials said. Police shot dead the other attacker.
As the gunbattle unfolded, the scene was chaotic. The body of a man wearing a red shirt was lying near a burned-out vehicle in the rubble of the Arya hotel where the Indians lived. The windows of the nearby luxury Safi Landmark Hotel were blown out by the car bomb, littering the street with glass, masonry and other debris.
"I saw foreigners were crying and shouting," said Najibullah, a 25-year-old Safi hotel worker who ran into the street in his underwear after the first explosion. "It was a very bad situation inside. God helped me, otherwise I would be dead."
Policemen and rescue workers carrying the wounded lumbered down the rain-soaked streets, largely empty because Friday was a holiday marking the birth of Islam's Prophet Muhammad. Police escorted a dazed middle-aged woman dressed in pink pajamas but no shoes her socks soaked with rainwater.
"I haven't seen ... where are my ...," she muttered, speaking only in fragments.
As the fighting raged, Taliban spokesman Zabiullah Mujahid phoned The Associated Press from an unknown location to claim responsibility, saying five suicide attackers were "targeting two places used by foreigners."
The assault was the deadliest in the capital since Oct. 8, when a suicide car bomber killed 17 people outside the Indian Embassy. A suicide car bomber killed more than 60 people in an attack at the gates of the Indian Embassy in July 2008.
India accused archrival Pakistan's main spy agency of involvement in the 2008 attack.
Although India made no such allegations after the Friday assault, the deaths of so many Indians raised speculation that the attack could be linked to the rivalry between the two nuclear-armed neighbors, both of which are deeply involved in Afghanistan.
India is among the largest economic donors to Afghanistan apart from countries that have sent troops to the NATO-led mission. India is seeking regional allies and access to oil- and gas-rich central Asia.
India has also expressed an interest in training Afghan security forces to the anger of Pakistan. India's growing role here is strongly opposed by Pakistan, which wants a friendly government without ties to its rival, and by the Taliban, with whom the Pakistani intelligence services have maintained longtime ties.
Many of the Islamic extremist groups in the region have been fighting the Indians for years in Indian-controlled parts of Kashmir.
"The basic message is a warning to India to reduce its involvement, or perceived involvement, in Afghanistan," said Ali Ahmad Jalali, a former Afghan interior minister and now a professor at the National Defense University in Washington. "At the same time, it could have other messages: that Kabul is not a safe place. It is intended to intimidate people, unsettle people, and create a sense of insecurity."
Karzai called it a "terrorist attack against Indian citizens" who were helping the Afghan people. He said in a statement that the attack would not affect relations between India and Afghanistan.
In the Indian capital of New Delhi, Foreign Minister S.M. Krishna called the attacks "barbaric" and a matter of "deep concern."
"These are the handiwork of those who are desperate to undermine the friendship between India and Afghanistan," he said in a statement.
The attack comes a day after India and Pakistan held their first official talks since India suspended peace negotiations following the November 2008 Mumbai attacks that it blamed on Pakistan-based militants. India insisted Thursday that Pakistan still needed to take more aggressive efforts to rein in anti-Indian insurgents in Pakistan.
Mazhda, the Kabul analyst, speculated that "elements in Pakistan" that have influence over the Taliban want to undermine India-Pakistan talks.
"The crisis in Afghanistan is bigger than Afghanistan," Mazhda said.
Also Friday, German lawmakers approved a plan to send up to 850 extra troops to Afghanistan, increasing the maximum number of Germans serving there to 5,350 from 4,500 a boost to NATO's multinational force.
The German decision comes a week after the Dutch government collapsed over a proposal to keep the Netherlands' 2,000-strong contingent from going home this year.