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"All of the attackers were killed, without success in achieving their goals — This again demonstrates the futility of the Taliban's efforts to use violence and terror to achieve their aims," he said in a statement. "We again call on the Taliban to come to the table to talk to the Afghanistan government about peace and reconciliation."
The palace is in a large fortified area of downtown Kabul that also includes the U.S. Embassy and the headquarters for the NATO-led coalition forces, and access is heavily restricted. Some Kabul residents initially thought the gunfire was a coup attempt because the idea of a Taliban attack within the security zone seemed so unlikely.
A group of journalists, including from The Associated Press, were waiting to enter the palace grounds for a news event with Karzai when they witnessed the start of the attack. The journalists took cover behind a religious shrine, pulling a young boy off the street who had been caught in the open on his way to school.
Kabul police chief Gen. Mohamad Ayub Salangi said the gunmen jumped out of their SUV and opened fire after the second vehicle was stopped by security forces while trying to use fake documents to get through a checkpoint. The second vehicle's car bomb then exploded.
Smoke could be seen coming from the area of the hotel where the CIA is said to be located, but there was no immediate indication any of the buildings were hit in the attack.
Also early Tuesday, in the southern province of Kandahar, a minibus hit a bomb buried in the road, killing 11 members of a groom's family on their way to an engagement party, said Kandahar governor's spokesman Ahmad Jawed Faisal. Faisal said the dead included eight women, two children and a man, and two other men were also wounded.
In Oruzgan, the province north of Kandahar, provincial governor's spokesman Abdullah Hemat said Tuesday that six Afghan national police were killed the day before when their patrol was attacked with a roadside bomb.
And a NATO convoy was hit with a roadside bomb in the province of Ghazni, southwest of Kabul, destroying a vehicle but causing no casualties.
Associated Press Amir Shah contributed to this report.