Suspected Islamist militants attacked a hotel in central Mali used by U.N. staff, killing at least six people, taking others hostage and holding off troops encircling the building on Friday, residents and military sources said.
A Russian and a Ukrainian were among those being held inside the Byblos Hotel, officials from their countries said.
One UN employee has been confirmed killed in the attack.
There were up to eight other captives and South African and French citizens had also been staying there, government officials said.
The attack well south of the Islamic militants' Saharan desert strongholds highlights the threat posed by remnants of an al Qaeda-linked insurgency that appears to be stepping up its campaign against Malian troops and U.N. personnel.
Smoke rose from the hotel and heavy weapons fire rang out through the afternoon as government forces attempted to dislodge the gunmen, who stormed the building near the airport in Sevare, around 600 km (400 miles) northeast of the capital Bamako, before 8 a.m. (0800 GMT).
The body of a white male victim was visible in front of the hotel, a witness said. Five Malian soldiers were killed in the clashes, Maiga said. Three attackers, one strapped with explosives, also died.
Gunfire subsided by the early evening and soldiers surrounded the building in a tense standoff.
"The armed men have withdrawn inside the hotel and have taken the people inside hostage," army spokesman Colonel Souleymane Maiga said. "The army is there at the site and we are looking for a solution that will preserve human life."
A 2013 French-led military operation drove Islamist fighters out of cities and towns they had seized a year earlier in the nation's desert north.
While the United Nations has managed to broker a tenuous peace agreement between Mali's government and ethnic Tuareg rebels, Islamist fighters left out of the negotiations have mounted a resurgence.
Former colonial ruler France and other Western and regional nations fear Islamist fighters could turn the remote region into a launching pad for foreign attacks if they regain power there.
The U.N.'s MINUSMA peacekeeping mission in Mali confirmed gunmen had entered a hotel in Sevare but would not comment on whether its troops or officials were there.
In the capital Bamako, police officials with clipboards visited hotels making lists of foreigners in each in an effort to increase security in case of further attacks.
Seven suspects were arrested in connection to the hotel attack, according to a government statement, and five hostage takers were believed to be inside, Souleymane Dembele, another military spokesman, said.
Dembele said an east European and three other MINUSMA personnel were believed to have escaped during the attack.
Several groups are ramping up attacks further south in areas previously considered secure.
Sahara-based group al-Mourabitoun claimed responsibility for an attack on a restaurant in Mali's capital Bamako that killed five people, including a French citizen and a Belgian security officer in March.
Ansar Dine, a Malian group with links to al Qaeda, last month claimed responsibility for a series of attacks on U.N. peacekeepers and the Malian army in Bamako and areas near the Ivory Coast and Mauritania borders.