The Taliban claimed responsibility for a car bomb attack on a guest house near the Spanish embassy in Kabul on Friday, and said fighting was still going on at the scene.
Gunfire was reported immediately following the explosion, in a heavily protected area of the capital close to many foreign embassies and government buildings. Officials said police were on the scene.
At least three insurgents appeared to be involved in the attack, a police official said.
A Taliban spokesman said the attack targeted "an invader's guest house".
At least seven people were brought to a hospital operated by the aid group Emergency, located around 700 metres from the Spanish embassy, according to a tweet from the organisation, but there were no other reports of damage or casualties.
The attack was the latest in a series against foreign targets in Kabul as the Taliban have stepped up their insurgency following the withdrawal of international forces from combat operations last year.
The blast, which interrupted several months of relative calm in the Afghan capital, came after President Ashraf Ghani returned from a regional peace conference in Islamabad aimed at reviving stalled peace talks with Taliban militants.
It followed an insurgent attack on an airport complex in the southern city of Kandahar that killed 50 civilians and security forces personnel, and which was only suppressed after more than a day of fighting.