MUMBAI - MUMBAI took its first steps towards recovery on Sunday after the trauma of a 60-hour militant assault that cost the lives of nearly 200 and left blackened scars on the face of India's financial capital.

As intelligence chiefs scrambled to work out how a group of about a dozen militants had managed to mount audacious attacks on multiple sites, the crisis risked escalating into a major stand-off between nuclear-armed India and Pakistan.

Indian Foreign Minister Pranab Mukherjee said that 'some elements in Pakistan' were responsible for the assault.

But Pakistan President Asif Ali Zardari warned India against any 'over-reaction' and vowed the 'strictest' action if Pakistani involvement was proved.

Shortly after dawn on Saturday, the third day of the siege, heavy gunfire and loud explosions at the luxury Taj Mahal hotel signalled the final commando offensive against the militants, who had held hundreds of security personnel at bay for 60 hours.

The previous day, elite troops had stormed a Mumbai Jewish centre and killed two gunmen - but also found eight dead Israeli hostages, including a US-based rabbi and his wife, who were murdered as the commandos closed in.

Another luxury hotel that was attacked, the Oberoi/Trident, was declared clear of militants late on Friday, with scores of trapped guests rescued and 32 bodies found.

Intelligence officials said the militants were 'all well-built and at the peak of their health, aged between 24 and 30, and were heavily trained in military tactics'.

Mumbai disaster official R. Jadhav said that 195 people had been killed and nearly 300 injured in the attacks, which began when the militants split into groups to strike multiple targets across the city, including the main railway station and a hospital.

The 27 foreigners killed included a total of nine Israelis, five Americans, two French nationals, two Australians, two Canadians, a German, a Japanese, a British Cypriot, an Italian, a Singaporean, a Thai and a Mauritian.

About 15 security personnel were killed, including the head of Mumbai's anti-terrorist squad, who was cremated with full honours on Saturday at a funeral attended by thousands.

Eleven militants were confirmed dead and one, a Pakistani national, captured.

One group entered Mumbai by boat, while others had arrived a month ago to stockpile arms and explosives and infiltrate the targets before the attacks were launched.

Survivors have given terrifying accounts of the carnage in the hotels. Many said they hid in the dark for hours, barricaded in rooms or hiding under beds, inside wardrobes or bathrooms.

'I cannot believe what I have seen in the last 36 hours. I have seen dead bodies, blood everywhere and only heard gunshots,' said Mr Muneer Al Mahaj, an Iraqi national, after he was rescued.

Television footage of the inside of the hotel showed half-eaten meals left on tables as diners fled for their lives. The restaurant walls were pockmarked with bullet holes and the floor covered with a thick layer of glass.

Witnesses said the attackers had specifically rounded up people with US and British passports.

US President George W. Bush on Saturday promised full support to India as it investigates the attacks, saying terror would not have 'the final word'.

Both the United States and Britain have offered to help investigate the assault on Mumbai, which has been hit by terror attacks before. Nearly 190 people were killed in train bombings in 2006.

India's newspapers laid much of the blame at the door of the intelligence agencies.