Sixteen drug hitmen and two soldiers were killed in a shootout in the Mexican beach resort of Acapulco, the army said today.
Gunmen battled troops from a house, throwing hand grenades at soldiers who had surrounded them and spraying gunfire into military vehicles and nearby homes.
The firefight, near tourist hotels, began late last night and went on until after midnight.
"There were grenade and rocket explosions, and weapons like AK-47s," said an employee of a neighboring hotel. "The fight lasted almost two hours."
The army said it detained five people and confiscated dozens of rifles, grenade launchers and other weapons.
President Felipe Calderon has staked his presidency on crushing drug gangs whose turf wars have killed about 2,300 people so far this year. Some 45,000 troops and federal police have been deployed across the country.
Rival drug gangs fought over territory in Acapulco, on the Pacific Coast, several years ago, but the resort town has been relatively free of drug violence in recent years.
Drug violence across the country has damaged investor sentiment and the US government is concerned by instability in Mexico, its ally and a big oil supplier.
US President Barack Obama visited Mexico City in April, praised Calderon for tackling the drug gangs and offered more US help in the war.
Drug violence has tarnished the reputation of Mexico's beach resorts, like Cancun and Ixtapa.
The Beltran Leyva gang, rivals of the powerful Sinaloa cartel, is believed to dominate the drug trade around Acapulco, a popular destination for vacationing US college students.
Tourism, a key industry for Mexico, took a hit in late April and early May when the H1N1 flu virus spread through Mexico and scared off travellers.
Reuters