The Somali Islamist group al Shabaab claimed responsibility for Saturday's attack on the Kenyan capital's Westgate mall, which is frequented by Westerners as well as Kenyans. Several foreigners, including a Canadian diplomat, were among the dead.
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 2 to 78.
France said two of its citizens had been killed, and Canada said two Canadians had died, including a 29-year-old diplomat.
U.S. Secretary of State John Kerry said there were no Americans among the dead but that several U.S. citizens had been hurt and the wife of a U.S. diplomat working for the U.S. Agency for International Development was killed.
Police said the attackers were holding an unknown number of people on Sunday and the standoff was focused on the mall's Nakumatt supermarket, one of Kenya's biggest chains.
Kenyatta said the security forces were engaged in a "delicate operation," with the top priority being to safeguard the lives of people being held.
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 group appeared to taunt the security forces, saying on its official Twitter handle 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.
The raid presents Kenyatta with his first major security challenge since a March election victory. He 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 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 on the coast and tried to shoot down an Israeli jet in a coordinated attack.