RIO DE JANEIRO (AP) — Heavily armed drug gang members engaged in an intense firefight with police, then fled into a luxury hotel popular with foreign tourists and held about 30 people hostage for three hours Saturday before surrendering.

The upscale, beachside neighborhood of Sao Conrado where the Intercontinental Hotel sits was transformed into a war zone as upward of 50 gunmen with high-caliber rifles, pistols and even hand grenades faced off with police.

A police spokeswoman said the gunbattle began when police spotted about 10 cars and vans leaving the Vidigal slum heading toward the nearby Rocinha slum, one of Latin America's largest.

Both shantytowns are controlled by the Amigos dos Amigos (Friends of Friends) drug gang, and the spokeswoman said the gang members were leaving an all-night party in Vidigal when they ran into the police patrol and began shooting.

Bullets flew for about 40 minutes, terrifying residents of Sao Conrado, which contains a road linking the two slums. Most of the gunmen fled into Rocinha, but 10 ran into the Intercontinental where they quickly grabbed hostages and holed up in the hotel's kitchen.

Spent casings littered the streets around the hotel. One woman was killed, and four bystanders and three policeman were wounded.

Police said initially that the dead woman was an innocent bystander, but later said she was with the gunmen and had a warrant out for her arrest for alleged drug gang involvement.

"It seemed as if I was in Iraq," neighborhood resident Jose Oliveira e Silva told the Globo television network.

Amateur video aired on Globo showed a group of black-clad police taking heavy fire and returning it from behind a garbage truck. Sanitation workers in bright orange jumpsuits also huddled behind the truck, waiting for the onslaught to end.

"We are all frightened to death," another witness, Ricardo Valladares, told Globo during the fighting. "No one is leaving the building because we don't know if there are more criminals nearby."

The police spokeswoman, who could not be identified because she was not authorized to discuss the matter, said authorities negotiated with the gunmen to get them to surrender.

"All of the hostages are freed and 10 suspects are in custody," she said, adding that police searched the hotel for other gunmen but found none.

Other television images showed an elite military police unit entering the hotel and evacuating dozens of guests, many of whom were there for a dentists' convention.

Security in Rio de Janeiro is of great concern as the city prepares to host the final of the 2014 football World Cup and the 2016 Olympic Games. Officials have vowed to fight violence, and in the past year started an aggressive program of invading slums where heavily armed drug gangs hold sway, driving them out and creating police posts.

The program has managed to clear gangs from about 10 slums in Rio's rich southern zone.

Rio de Janeiro Gov. Sergio Cabral praised officers for bringing Saturday's standoff to a close without further bloodshed.

"It is important to highlight the action of the police. Solid, professional and effective," Cabral said in a statement. "Since we began governing we have not had any illusions about the size of our challenge."

The Intercontinental is a favorite among foreign tourists, but the nationalities of those taken hostage was not immediately known.


Associated Press writer Stan Lehman in Sao Paulo contributed to this report.