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* Al Qaeda-linked Somali Islamists claim attack

* Al Shabaab demanding withdrawal of Kenyan troops from

Somalia

* Stand-off in supermarket after mass shooting

* President loses relatives in raid, vows to punish

attackers

By Duncan Miriri and James Macharia

NAIROBI, Sept 22 (Reuters) – Kenyan security forces were

locked in a stand-off on Sunday with gunmen who killed at least

39 people at an upmarket shopping mall in the Kenyan capital,

and it was still unclear how many hostages the al Qaeda-linked

militants were holding.

The Somali Islamist group al Shabaab claimed responsibility

for Saturday’s assault on Nairobi’s Westgate mall, which is

frequented by Westerners as well as Kenyans.

Kenyan President Uhuru Kenyatta said more than 39 people had

been killed, among them close members of his own family. A

senior government official said on his Twitter feed that more

than 300 people had been wounded. The dead included children and

the wounded ranged in age from two to 78.

France said two of its citizens were dead and Canada said

two Canadians had died, including a diplomat. The U.S. State

Department said it had reports that American citizens had been

hurt, and Britain said its nationals had undoubtedly been

affected.

Police said the stand-off was focused around the Nakumatt

supermarket, one of Kenya’s biggest chains, where the attackers

were said to be holding hostages.

Kenyatta said the security forces were engaged in a

“delicate operation” with the top priority being to safeguard

the lives of people caught up in the incident, but it was

unclear how many were still trapped inside the building.

Al Shabaab, which has links to al Qaeda and is battling

Kenyan and other African peacekeepers in Somalia, had repeatedly

threatened attacks on Kenyan soil if Nairobi did not pull its

troops out of the Horn of Africa country.

The raid presents Kenyatta with his first major security

challenge since a March election victory. Kenyatta has vowed to

defeat the militants who have said it is time to shift the war

to Kenyan soil.

“We have overcome terrorist attacks before,” he said.

The mall assault has been the biggest single attack in Kenya

since al Qaeda’s east Africa cell bombed the U.S. embassy in

Nairobi in 1998, killing more than 200 people. In 2002, the same

militant cell attacked an Israeli-owned hotel at the coast and

tried to shoot down an Israeli jet in a coordinated attack.

The major attack on an iconic mall that draws tourists,

expatriates and Kenya’s wealthy elite like a magnet risks

hammering an already struggling tourism sector and could

puncture Kenyatta’s plans to boost east Africa’s biggest

economy’s reputation as a sound investment destination.

Al Shabaab’s last big attack outside Somalia was a twin

attack in neighbouring Uganda, targeting people watching the

World Cup final on television in Kampala in June 2010.

Kenya sent its troops into Somalia in October 2011 to pursue

the militants it blamed for kidnapping tourists and attacking

its security forces.

HOSTAGES

Relatives of hostages thought still to be trapped inside the

Westgate mall were keeping vigil in a nearby Hindu centre,

waiting for the next move by the security forces.

Kevin Jamal said his sister was taken hostage while shopping

at the mall, and he had been waiting for more than six hours.

“I want her to come out alive,” Jamal told Reuters as he

joined Kenya Red Cross Society volunteers for a meal of hot

curry and chips served by the centre.

He said the Kenyan security agencies could have done better,

saying “they should not allow themselves to be outmanoeuvred by

less than 20 people.”

Police say it is not clear how many attackers they are

dealing with, and those rescued said at least one of the

attackers was a woman. One of the attackers had been shot and

arrested, but died shortly afterwards at a hospital.

A fierce gun battle erupted between the police and the

militants after Saturday’s initial assault. The shooting

continued hours after the first attack and soldiers then managed

to enter the building, hunting for the attackers shop by shop.

Witnesses said the attackers were armed with AK-47 rifles

and wore ammunition belts.

There was a lull in activity in the hours after midnight.

Troops were milling around at the mall, near two armoured

personnel carriers and two big fire trucks, one with a long,

extendable ladder.

Music was still playing and a video screen was on at a

gourmet burger shop. Journalists and curious bystanders were

moved out of the mall onto a side road.

Al Shabaab appeared to taunt the security forces, saying on

its official Twitter handle @HSM_Press that there would be no

negotiations whatsoever with Kenyan officials over the standoff.

“10 hours have passed and the Mujahideen are still strong

inside #Westgate Mall and still holding their ground. All praise

is due to Allah!”, the group said.

(Additional reporting by Edmund Blair; Writing by James

Macharia; Editing by David Brunnstrom)