SYDNEY: Two hostages and an extremist Iranian-born gunman were killed in a siege that ended when armed police stormed a central Sydney cafe Tuesday, as a shocked Australia struggled to come to terms with the tragedy.

Police in SWAT-style gear hurled percussion grenades and opened fire in the early hours of the morning after a number of staff and customers managed to flee for their lives from the Lindt eatery in the heart of Australia's biggest city.

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