As the stand-off entered its third day, sustained bursts of rapid gunfire broke out at dawn, and soldiers posted around the complex ducked for cover. This was followed by three big explosions and more sporadic weapons fire, AFP correspondents at the scene said.
The Kenyan army said it had secured most of the upmarket, part Israeli-owned complex, while a security source said a final assault was underway against the al-Qaeda-linked Somali Shebab rebels, believed to be pinned down in a part of the mall but using hostages as human shields.
"Our concern is to rescue all hostages alive and that is why the operation is delicate," the Kenya Defence Forces said in a statement overnight, adding that it was trying to bring a "speedy conclusion" to the drama.
It did not say how many people were being held by the dozen-or-so attackers, who marched into the sprawling four-storey complex at midday Saturday, spraying shoppers with machine gun fire and tossing grenades.
Shebab spokesman Ali Mohamud Rage warned the hostages would "bear the brunt of any force directed against the mujahedeen".
In an address to the nation yesterday, Kenyan President Uhuru Kenyatta vowed the attackers will "not get away with their despicable and beastly acts." "We will punish the masterminds swiftly, and indeed very painfully," he vowed, revealing that a family member -- a nephew and his fiancee -- were among the dead.
A Kenyan security source and a Western intelligence official said Israeli forces were involved in the operation, along with British and US agents.
Terrified witnesses told of scenes of horror and panic as the masked gunmen stormed in. Officials estimated some 200 people have been wounded, and the Red Cross made a nationwide appeal for blood donors.
Police sources who had entered the building last evening said they feared that death toll, now confirmed at 68, "could be much, much higher... Judging from the bodies sighted inside."
Somalia's Shebab rebels said the carnage was in retaliation for Kenya's military intervention in Somalia, where African Union troops are battling the Islamists. "If you want Kenya in peace, it will not happen as long as your boys are in our lands," Rage said.
The group also issued a string of statements via Twitter, one of them claiming that Muslims in the centre had been "escorted out by the Mujahideen before beginning the attack".
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