Several gunmen blew up a car bomb and sprayed bullets in a crowded area and took hostages in a shopping mall in eastern Baghdad on Monday, killing at least 10 people, police said.

The gunmen were still holed up in the shopping centre in Baghdad al-Jadida, a police colonel said.   Police said that it was feared the attackers were wearing suicide belts.

A hospital official confirmed the death toll and said 14 people were also reported to have been wounded in the attack.

"They are inside the Zahrat Baghdad mall. When the security forces got too close, they killed three hostages," a police official said.

"We are taking a cautious approach now. We want this attack to end with the lowest possible number of casualties," the official said.

An interior ministry source said an unspecified number of gunmen opened fire in the street after a car bomb exploded and briefly clashed with members of the security forces before entering the mall