A large group of armed Chechen rebels stormed a crowded Moscow theater Wednesday night, taking hostage as many as 700 people in the audience for a popular musical and demanding an end to Russia's long-running war in the separatist southern republic.

Witnesses reported gunfire when the group of about 40 men and women, armed with automatic weapons and wearing camouflage uniforms and masks, seized the hall after 9 p.m. They said the hostage-takers had grenades strapped to their bodies and said they were prepared to blow up the building if it were stormed by troops and police.

Hours later, a standoff appeared to have set in and continued through the night as hundreds of Russian soldiers and police, ambulances and firetrucks surrounded the massive theater not far from central Moscow. By early this morning, area residents were being evacuated in buses.

About 9:10 a.m., an explosion was heard in the vicinity of the theater. However, authorities would not describe what had happened.

A spokesman for the city police confirmed that the hostage-takers were Chechens and said they were holding more than 650 people in the theater after releasing about 150 others. The spokesman, Valery Gribakin, said that at least one woman was among the Chechens, though witnesses reported several women among them. A few additional hostages were released later, including a pregnant woman and several children.

"The terrorists are demanding one thing: the end to the war in Chechnya," Gribakin said. The rebels later added another demand: "a large sum of money," according to Russian news agencies. But as dawn arrived, authorities said they were no longer in contact with the militants.

The mass hostage-taking in the center of the capital marked a dramatic escalation by Chechen separatists, who quickly asserted responsibility for the attack on their Web site. Russia originally went to war in Chechnya in 1994 but pulled out without victory two years later. In 1999, troops were sent back in after Chechen rebels were blamed for a series of apartment bombings in Moscow and other cities that killed more than 300 people.

Russian officials have long referred to the war as an "anti-terrorist operation." President Vladimir Putin has repeatedly declared victory in the conflict even as new clashes were taking place daily.

Shortly after the theater here was seized, Putin convened an emergency meeting of his national security team, though he had no comment as the drama dragged into the night. He later canceled a trip to Europe that was to have begun today. The director of the Federal Security Service, Nikolai Patrushev, said that "all necessary, concrete measures" would be taken to resolve the situation. Authorities said later they had no immediate plans to storm the building and were trying to negotiate a resolution.

A Chechen Web site claimed the hostage-takers were led by Movsar Barayev, the nephew of a Chechen warlord, Arbi Barayev, who was killed last year.

In the hours after the audience was taken hostage, swarms of Russian soldiers from the anti-terrorist Alpha Team surrounded the building on Melnikova Street, still known by its Soviet-era name, the House of Culture for the State Ball-Bearing Factory, but now painted bright blue and lit up by white lights. They were joined by the mayor of Moscow, Yuri Luzhkov, and dozens of reporters. The member of parliament for Chechnya also arrived on the scene, hoping to negotiate, and at one point overnight said he had made contact with the gunmen inside.

As the police used commandeered buses and police cars to block off surrounding roads, a few people who had escaped the theater emerged to talk about the chaos they said ensued when the rebels seized the building at the start of the second act of "Nord-Ost" ("North-East").

Russian news agencies quoted witnesses as saying the men had demanded "an end to the war" in Chechnya. There were reports early this morning that at least one of the hostage-takers had been wounded and was being treated by a doctor in the audience.

In one dramatic account that played live on television, a member of the orchestra was heard by cell phone describing a threat by the rebels to kill 10 of the hostages if one of their number was harmed. Two of the hostage-takers, one man and one woman, were standing near her, said the orchestra member, Tatyana Solnishkina.

She then begged the police not to storm the building. "Please don't start storming. There are a lot of explosives. Don't open fire on them," Solnishkina said. "I am very scared. I ask you, please, do not start attacking."

"The most horrible thing is they were chanting, like kamikazes," said Alevtina Popova, an actress in the production who escaped after being backstage with with several other members of the cast when the rebels arrived. They used curtains and scarves to climb out the windows, but heard the commotion inside the theater and the hostage-takers over the loudspeaker.

Popova and other witnesses said the hostage-takers were Chechens. She said they separated men and women in the audience and made everyone put their hands on their heads. Like other witnesses, she said the gunmen allowed some members of the audience who were fellow Muslims to leave.

Throughout the night, terrified theater-goers managed to call on their cell phones and describe the scene. One was a reporter for the Russian news agency Interfax. She phoned from the theater, reporting that the rebels had fired into the air and would not let the audience leave. She later reported that the hostage-takers were calling themselves "suicide commandos of the 29th division" and were prepared to blow up the building if police moved in.

"They were in masks, in masks," said another woman, who described how she had climbed out of a window to escape.

Several children were allowed to leave, including one boy who was shown minutes later on Russian television saying that his mother and sister were still inside. But dozens more children apparently remained in the theater as the standoff continued.

German and British citizens were said to be among the hostages.

Alexei Belov, stuck in one of Moscow's legendary traffic jams, was late to the theater to meet his wife, Natalya Belova, a schoolteacher. He arrived just in time to see what appeared to be the beginning of the raid. He said he heard gunfire and saw "people shooting from the main entrance of the building."

Hours later, he waited in the freezing rain. His wife was still inside with 15 of her students, ages 10 and up. "We could never imagine that something like this could happen," he said. "These terrorists are becoming more and more inventive."

Tatyana Chibisova arrived at the theater along with dozens of other relatives of those trapped inside, nearly hysterical about the fate of her daughter Yulia, 20. She managed to talk to her briefly on her cell phone. Sobbing, she recounted how her daughter had gone to the theater with a friend. Her daughter told her, " 'Don't worry, Mama, it'll be okay,' but of course I'm worried, I'm very anxious." As they were talking, the cell phone connection was cut off.

Many of the hostages' relatives became increasingly agitated about their loved ones' fate. "Let me in, let me in," demanded one particularly insistent man. "I'll get the babies out." Another woman said she had talked to her daughter inside, who told her they would be all right as long as police didn't storm the building. So her mother, outside the theater, took up the chant, "Peace, peace, peace."

Nadezhda Pankratova also had a daughter inside, along with three of her daughter's children. The youngest child was let go. "They were told they're going to stay there a long time until the terrorist demands are met," Pankratova said. Then, she held up for the TV cameras color pictures of her daughter and grandchildren.

Public opinion in Russia long ago turned against the war in Chechnya, but mostly because it is perceived as an unwinnable conflict, not because of sympathy for the rebels.

This is not the first time that Chechen guerrillas have staged a mass hostage-taking. During the first Chechen war, the rebels twice undertook dramatic raids into neighboring regions. In one incident, more than 2,000 civilians were held for several days in a hospital in Dagestan. In another, more than 120 died in the town of Budennovsk.