"We raided the JMB (Jamaat'ul Mujahideen Bangladesh) hideout last night and our operation still continues...Our bomb disposal units are looking for more grenades inside" the six-story building at Dhaka's Mirpur area, a police spokesman told PTI.
He said seven persons were detained from the apartment and "we are almost sure that three of them are important figures of JMB".
Others were detained as suspected members of the outfit, blamed for recent attacks on foreigners and religious minority groups including Shia Muslims in Bangladesh.
His comments came as TV footages showed special armed units of police, elite anti-crime Rapid Action Battalion and plainclothesmen laying a siege around the building.
Also Read
The people in the neighbourhood said the security forces raided the house last night and evacuated inmates of the other apartments by late night and thereafter sounds of explosions were heard from inside apartment building.
But a police officer at the scene told newsmen their "well organised" raid yielded no casualty though the militants tried to attack the security personnel.
Dhaka police spokesman Monirul islam earlier said the raid was carried out on the eve of Eid-e-Milad-un-Nabi and Christmas festivals marking the simultaneous anniversaries of advent of the prophets of Islam and Christianity on the basis of a confessional statement of an earlier detained JMB operative.
Police earlier said special security vigils were ordered across the country fearing assaults by Islamists who consider celebration of Prophet's birth anniversary as un-Islamic.
Bangladesh Hindu Buddhist Christian Okiya Parishad, a forum of other major faiths in the Muslim majority country, today said the JMB issued death threats to 36 major figures of the Christian community ahead of the Christmas festival.
Six JMB militants, including its chief Shaikh Abdur Rahman and second-in-command Siddiqul Islam Bangla Bhai, were executed in 2007 after trial.