The hostage-takers surrendered peacefully at 1100 (0800 GMT) to the Turkish authorities, releasing all of their captives unharmed.

They didn't threaten us and offered us lots of refreshments.

Lefterios Polemis Hostage

They were taken by bus to Istanbul police headquarters for questioning after the 12-hour drama at the Swissotel, overlooking the Bosphorus.

Istanbul police chief Kazim Abanoz said that the 120 hostages were all safe and that the five-star hotel is now being checked for explosives.

'Amateurs'

"There were young people, amateurs, in the group. We decided not to opt for a police assault which could have been risky," Mr Abanoz said.

The group was led by Muhammed Tokcan, a Turkish citizen of Chechen origin who hijacked a ferry and seized more than 200 hostages before releasing them in 1996.

Mr Tokcan was imprisoned in that case after surrendering to police, but was released in November last year under an amnesty law.

The gunmen surrendered peacefully to security forces and "apologised" to the Turkish people, who were "currently going through a serious economic crisis", said Mehdi Cetinbas head of the Caucasus Association, who acted as an intermediary.

Negotiations denied

Turkish Interior Minister Saadettin Tantan was quoted by Turkish television as saying there had been no negotiations and none of the assailants' demands had been met.

Muhammed Tokcan is led away by police

But the spectacular hostage-taking threatens to revive tensions between Turkey and Russia, which has long accused Ankara of closing its eyes to activities by Chechen guerrillas on its territory.

The Russian foreign ministry has condemned the assault as "barbaric" and called on the Turkish authorities "to take steps to punish the criminals and prevent a repeat of such events."

The drama started on Sunday evening when gunmen burst into the lobby of the Swissotel, firing automatic weapons into the ceiling.

High profile

Some guests managed to escape from the hotel through fire exits.

"We thought it was a robbery at first," said Italian tourist Franca Dalpiaga. "They told us to get down on the floor, and we were preparing to hand over our possessions - after half an hour we realised it was political."

The hotel was chosen apparently because of the high number of western tourists among its 600 guests.

In a statement issued a couple of hours before the siege ended, the gunmen said their action was in protest at Russia's "bloody attacks" in the Caucasus.

Change of mind

The gunmen had said early on that they did not intend to harm the hostages.

"We spent the whole night in the lobby," said Lefterios Polemis, a Greek tourist. "They didn't threaten us and offered us lots of refreshments."

However, they did warn that they would keep the hostages for a long time and it is not clear what caused them to change their minds so rapidly.

A BBC correspondent at the scene says the gunmen complained that the suffering of the Chechen people was not receiving enough attention in the world media.

There is a substantial Chechen exile community in Turkey, which is particularly strong in Istanbul.

Millions of Turks also trace their ancestry to the Caucasus, where Chechnya is located.