Casualties were feared as a blast and ensuing gunshots were heard in downtown Kabul, capital of Afghanistan, on Monday.

The explosion, according to eyewitnesses, took place near a Chinese guesthouse, Xinhua news agency reported.

The blast followed by gunshots, eyewitnesses said, adding the building caught fire and smoke was billowing from the guesthouse.

The Chinese Embassy in Afghansitan said it was closely monitoring the situation and taking relevant actions, an official from the embassy said.

Afghan officials have yet to make comment on the incident.