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The police said the dead also included three women believed to be family members of the suspected relatives of militants.
The residents said they had heard an explosion followed by several hours of shooting.
The clashes took place in Sainthamaruthu, not far from the hometown of the alleged leader of the suicide bombings on Easter Sunday.
Around the same time, security forces raided another building in a nearby town, saying they had found explosives and a drone.
Sri Lanka has been on high alert since at least 250 people have been killed and more than 500 injured since a coordinated wave of bombing last Sunday.
The bombings targeted churches that were crowded with tourists for the Easter holidays.
The Sri Lankan authorities accused a local Islamist extremist group, National Tawheed Jamath, of the attacks, although the Islamic State Group (IS) claims it played a role.
Security forces have carried out raids across the country since the attacks, but officials say there are a dozen sympathizers of the Islamic State in the country.
How did the raid develop?
The police said Friday's raid followed a clue to a place in a major Muslim city in Ampara Sainthamaruthu near Batticaloa.
An armed group at the site unleashed an explosion and firefight, police said.
When troops arrived at dawn on Saturday morning, they found 15 bodies in the burned-out building, which was believed to be the alleged gunmen and family members, but also some civilians caught in the crossfire, the police said.
The area is not far from the hometown of the radical preacher Zahran Hashim, the alleged leader of the attacks, who was reportedly killed in a bomb attack on Sunday.
Another raid in the same city found IS flags, 150 bars of gelignite explosive, thousands of steel pellets and a drone camera, a military spokesman said.
According to local media reports, ten arrests were made on Friday, bringing the total number of people arrested since Sunday last Sunday to 80. President Maithripala Sirisena told reporters that intelligence agencies believed that there were about 130 IS-related suspects in the country and the police were still on the hunt. 19659029] Bomber & # 39; sat, ate and waited & # 39;
The manager of one of the hotels in Colombo targeted by a suicide bomber last Sunday described the BBC's pre-attack moments.
Rohan Karr said the suspected bomber had checked in at the Cinnamon Grand Hotel the night before, served a welcome drink and then went to his room.
"He came down in the morning with the backpack on his back and went to the restaurant had a tabl He was in the middle of the restaurant and walked around with his backpack on his back.
" We never thought it was the man was who will kill us.
"He was sitting, he ate, waiting for people to gather at the buffet, and when he saw a larger crowd, it was time he decided, which is the time for me to do maximum damage . "
How did the Catholic Church respond?
The Catholic Church in Sri Lanka has canceled all Sunday Masses until Sunday Archbishop Colombo Malcolm Ranjith said he saw a leaked security document warning of further attacks.
Cardinal Ranjith said the church had not been informed about intelligence alerts against possible attacks. "We did not know anything, it was like a lightning strike for us," he told reporters.
Asked for the warnings, he said, "I felt a little bit betrayed, I felt sad, it's a very serious failure of the security authorities not to tell us about it."
He said that the church would cease all church services until further notice, and urged parishioners to instead "stay in the house and make their prayers."
Security was increased by the mosques for Friday prayers, while some Muslims remained out of fear of revenge attacks.
What is the political precipitate?
The Sri Lankan Chief of Police and the Ministry of Defense topped off both because of the bombing.
However, Sri Lankan Prime Minister Ranil Wickremesinghe said that important warnings from the intelligence services had not been disclosed to him. He argued that since he had not known the warnings, he did not need to step back from his position.
"If we had any idea and had not acted, I would have immediately submitted my resignation," he said, adding, "But what do you do when you're out of the loop?"
The collapse in communications has focused attention on the clash between the two most powerful men in the country – Mr Wickremesinghe and President Maithripala – Sirisena.
Relations between the two have deteriorated so much that Mr Sirisena fired Mr Wickremesinghe last October. It was reinstated in December after the decisions of Sri Lanka's highest courts.
Who were the attackers?
Nine persons are suspected of the attacks. President Sirisena confirmed that alleged ringleader Zahran Hashim was killed in an attack at Hotel Shangri-La in the capital Colombo.
Two of the bombers are said to have been the sons of spice merchant Mohammad Yusuf Ibrahim, one of Sri Lanka's richest men. Mr Ibrahim was arrested and questioned after the attacks.
One of his sons was allegedly the second bomber at Hotel Shangri-La, next to Zahran Hashim. The other son is said to have attacked the restaurant at the nearby high-end Cinnamon Grand Hotel.
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