The cafes and restaurants are empty. The chatter of guests in hotel lobbies has gone quiet. The high-walled embassy compounds are even more closely guarded.

The recent killings of two foreigners in Bangladesh — an Italian and a Japanese — has spooked tourists and expatriates in the impoverished South Asian nation, raising alarms about whether Islamic radicals are gaining a foothold and whether foreigners are safe in the moderate, secular nation.

The Islamic State claimed responsibility for both killings, but the Bangladeshi government denied the extremist Sunni militant group was involved. Instead, it accused the opposition of supporting a conspiracy to destabilize the country of 160 million — a charge the opposition denies.

Any lost confidence in security could damage the country's economy, which relies heavily on foreign aid and investment. Already, hotels and shops catering to the foreign community said they were seeing losses.

"The killings are affecting our business. We had to cancel some bookings," said one five-star hotel manager in Dhaka, asking that neither she nor the hotel be identified for fear of hurting business further.

Another hotel manager, also refusing to be identified, said they had increased security staffing and video surveillance. "If there is any suspicion," he said, "our people in plainclothes are working around the hotel."

Last week's near-identical attacks on Italian Cesare Tavella and Japan's Kunio Hoshi — both were gunned down in daylight by motorcycle-riding youths — stunned many in Bangladesh for targeting two foreigners who had been living in Bangladesh for agricultural projects meant to help the poor. Tavella was shot in the diplomatic quarter of Dhaka, while Hoshi was attacked five days later in a village 300 kilometers (185 miles) to the north.

Most of the 224,000 foreigners living in Bangladesh work for embassies, aid groups or one of the many international clothing retailers that are part of the $25 billion garment industry, a pillar of the economy. Several countries, including the U.S., Netherlands and Spain, have asked their embassy staff to stay away from crowded places and travel in covered vehicles.

Twelve foreigners approached for comment this week declined to speak with The Associated Press for fear of drawing attention to themselves.

Bangladeshi business consultant Shoaib Aziz said his Japanese wife was "upset and not feeling comfortable" about returning home from Japan, while many of his clients including Japanese businesses "are delaying their planned tour of Bangladesh. They have factories here, but are waiting and rescheduling."

Medical equipment importer Nur Ahmed, who frequently visits foreign clubs including the U.S. Embassy's American Club, said they were emptying early as foreigners were heading home before dark.

The government insists they have the situation under control, and has sent officials to reassure diplomats and pledged increased security. Prime Minister Sheikh Hasina has built her reputation on promises of cracking down on radicals, banning six hardline militant groups while police arrested dozens suspected of members in recent years. While the government of the country is secular and traditionally moderate, the emergence of Islamist political groups has created a clear divide between moderates and radicals and contributed to political instability.

U.S. Ambassador Marcia Bernicat said this week that embassy staff felt safer after the government's reassurances, while praising Hasina's "zero tolerance" against terrorism and saying "we have everything we need to fight the emergence of ISIL in Bangladesh," using another acronym referring to the Islamic State.

Bangladesh has been struggling with a rising tide of radical Islam. At least four secular bloggers and online activists have been hacked to death with meat cleavers this year in attacks claimed by groups linked with the banned group Ansarullah Bangla Team. This week, a Christian pastor survived a knife attack by youths allegedly aligned with Islamic militants.

Bangladesh's economy cannot afford a reputation as a hotbed of Islamic extremism. Its economy depends on a $25 billion garment industry that supplies international clothing brands. With little infrastructure and fewer resources, it has struggled to attract foreign investment in other sectors.

The killings of foreigners "can only make matters worse, since image also plays an important role in the case of economic decisions," Fahmida Khatun, research director of the Dhaka-based think tank Center for Policy Dialogue, wrote in an opinion piece published Monday in the country's Daily Star newspaper.

Over the last year, Hasina has signed a slew of investment deals to set up special economic zones with countries including Japan, China and India, promising they would bring billions of dollars in foreign investment and drive further growth for the country's economy.

"This is alarming. Such killings will create panic among foreigners," said S.R. Masum, a political science student at Dhaka University. "People want to know what is going on. We are not at ease."

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Naqvi reported from New Delhi.