A car bomb went off in a hotel in Somalia's port city of Kismayuo where legislators and local elders were meeting, followed by gunfire, a police officer said.
"A blast occurred in Hotel Asasey in the heart of Kismayo, followed by gunfire. Local elders and lawmakers were having a meeting there. It is too early to know if there are any casualties," Major Mohamed Abdi, a police officer, told Reuters news agency from Kismayo on Friday.
Armed group al-Shabaab, which is believed to be linked to al-Qaeda and is trying to topple the Somali government, said it carried out a suicide attack.
Abdiasis Abu Musab, al-Shabaab's military operation spokesman, said the group was behind the attack and that fighting was still going on.
"First we targeted [the hotel] with a suicide car bomb and then armed 'mujahideen' [guerrilla fighters] stormed the hotel. We are still fighting inside the hotel," he said.
"There are many dead bodies inside the hotel, including a dead white man. We control the hotel now."
Hussein Nur, a shopkeeper in Kismayo, told Reuters: "There were many people including officials and elders, mostly from one clan, who were discussing the coming Kismayo election."
Nur was referring to elections in the city due sometime in August.
Al-Shabab was ejected from Mogadishu in 2011 and has since been driven from most of its other strongholds. In 2012, it was driven out of Kismayo, whose port had been a major source of revenue for the group.
Outside of Kismayo, al-Shabab still controls parts of Jubbaland, a region in southern Somalia.
The armed group remains a major security threat, with its fighters frequently carrying out bombings in Somalia and neighbouring Kenya, whose troops form part of the African Union-mandated peacekeeping force that helps defend the Somali government.