The gunmen stormed the upmarket restaurant in the diplomatic zone late on Friday and killed their mostly non-Muslim hostages, including nine Italians, seven Japanese and a citizen each from the United States and India.

Three of the six gunmen killed were under 22 years of age and had been missing for six months, Asaduzzaman Khan told Reuters in an interview at his Dhaka home.

The police and government officials have said the attackers were from well-off Bangladeshi families, a rarity and an indication that religious radicalisation was widening its scope.

Claiming responsibility, Islamic State warned citizens of "crusader countries" - that is, traditionally Christian western states - in a statement that they would not be safe "as long as their aircraft are killing Muslims".

It also posted pictures of five grinning fighters in front of a black flag who it said were involved in the attack, according to the SITE monitoring website.

But Khan said Islamic State was not involved, reiterating the government's position that home-grown militants were responsible for a spate of killings in the country over the past 18 months, including the latest one.

Asked about the photos, the minister pointed to a wall behind him and said: "If I fix a poster of IS here and stand with a machine gun, will it establish that IS is here?" The minister has blamed Jamaat-ul-Mujahideen Bangladesh, which claims to represent Islamic State in Bangladesh but has no proven links to it.

Security experts believe the suspect, who was hospitalised with serious injuries, would be crucial to the investigation into the attack. Khan said it was not clear if he was involved.

Islamic State also claimed responsibility for two bombings overnight in Baghdad that killed nearly 120 people and wounded  200, most of them in a busy shopping area while residents celebrated the Muslim fasting month of Ramadan.

Reacting to the two attacks over the past three days, Pope Francis asked people attending noon prayer at the Vatican in Rome to pray for the victims and their families. Late on Sunday in Bangladesh, hundreds of men, women and children held a candle light vigil near Dhaka's Shaheed Minar (Martyr's Monument) to pay respect to those who lost their lives.

"We don't want this," Nasima, a textile industry worker, told Reuters Television. "Please stop this, stop this, stop this from our society, from our country, I want to live in peace."

As Dhaka limped back to normal life, experts questioned the delay in launching the offensive against the militants. More than 100 commandos stormed the restaurant nearly 10 hours after the siege began, under an operation code-named 'Thunderbolt'.

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