Russian city attacked by 200 Chechen gunmen

The Deputy Interior Minister, Aleksander Chekalin claimed 50 pro-Chechen terrorists had been killed, but local officials said 12 policemen and 12 residents had died and at least 100 people were in hospital.

In Soviet times, Nalchik was a popular staging post for climbers scaling Mount Elbrus, Europe's highest peak. Yesterday it was a war zone. Russian television showed burnt-out cars, dead policemen in the street and residents fleeing.

Up to 200 pro-Chechen fighters had assaulted the city's airport, its border posts, its three police stations, the local security service headquarters and the local interior ministry. Gun battles raged through the day, hostages were taken and released, special forces, armour and helicopters were brought in to quell the assault and President Vladimir Putin ordered a shoot-to-kill policy. Mr Chekalin said: "The President ordered that not a single fighter be allowed to leave the city limits. Anyone who puts up resistance with weapons in his hands must be liquidated."

By the end of the day, Russian officials claimed that all attacks had been repelled but admitted two small pockets of resistance remained. Seven militants were reported to be barricaded in a police station with hostages and two other fighters were inside a gift shop, with one or two female hostages.

Russian officials said the militants were badly wounded and that it was just a matter of time before they were "eliminated". They had been told to surrender but appeared intent on a last stand or trying to escape in darkness. Russian media said some fighters had disguised themselves as civilians in an attempt to escape.

A Chechen website traditionally regarded as a mouthpiece for the militants said it had had a claim of responsibility from the rebel Chechen government. It said "mujahedin" units from the "Caucasus Front" had been involved and claimed that 110 Russian troops and policemen had been killed, an undisclosed number of prisoners taken and "trophy" weapons and armaments captured. The site referred to Chechen militant deaths as martyrs and called the Russians the forces of "occupation".

One Russian MP, Viktor Ilyukhin, said the Chechen warlord Shamil Basayev, who claimed responsibility for last September's Beslan school siege 60 miles away, had been spotted in Nalchik. In Beslan, 330 people, more than half of them children, were killed.

Yesterday, a rumour began that Basayev had been killed in the shoot-out but this was not confirmed; he has been reported killed many times, only to pop up to taunt the Kremlin. The militants want to spread their battle for independence from Moscow across the North Caucasus.

The city attack was the first major rebel assault since Abdul-Khalid Sadulayev took over as leader of the Chechen separatists in March after his predecessor, Aslan Maskhadov, was tracked and killed by Russian special forces.

The authorities claimed the attack was a diversion to stop them wiping out comrades of the fighters who had been cornered but analysts think it may have been a weapons-grab for another big operation.

The Communist MP Viktor Ilyukhin called the violence a poor reflection on the Kremlin. "We have not learnt any lessons from what happened in Beslan," he said. "[Officials] keep saying we will bomb terrorist bases abroad but we can't put things in order in our own North Caucasus."