NUEVO LAREDO, Mexico – Warring Mexican gangs fought a pitched battle with bazookas and grenades late Thursday in a middle-class neighborhood of this border city, terrorizing citizens who say they live in a “Baghdad-like” war zone.

The battle was so fierce that the U.S. ambassador in Mexico City announced Friday that he was closing the consulate here until at least Aug. 8. The announcement called the battle “an alarming incident” that involved “unusually advanced weaponry.” U.S. Ambassador Tony Garza said U.S. officials will use the week to assess security.

For more than 30 minutes Thursday, the sharp report of automatic-weapons fire, punctuated by thumping explosions, could be heard throughout this city. After the fighting had ended, the street where the confrontation had taken place bore all the signs of combat. The house at the fighting’s center was riddled with holes the size of melons. Part of it had collapsed. A building across the street was pocked with holes, indicating a fierce response with heavy weapons.

The battle offered a glimpse of the challenge facing the Mexican police and army as they try to root out rival drug gangs battling for control of this critical border region south of Texas. Some 300 heavily armed soldiers in tanks, accompanied by state, city and judicial police and federal investigators, cordoned off the street while they inspected the devastated house and talked to neighbors. Most neighbors claimed they’d heard nothing, even though the sound of explosions reverberated throughout this city of nearly half a million.

Those who did talk told a confusing tale of gunmen wearing the uniforms of the Federal Agency of Investigation, Mexico’s FBI, arriving in front of the house at 2411 Mexicali Street in southern Nuevo Laredo, about two miles from the U.S. border, at about 8 p.m.

“Suddenly there were explosions; they launched bazookas and grenades and machine guns,” said one man who witnessed the battle for about 20 minutes. Standing in a corner, the man pleaded that his name be withheld. “They’ll kill me. It’s become so dangerous,” he said before rushing off into the night.

Some neighbors said the fighting started earlier. “My husband and I went out at 6 p.m. because we started hearing gunshots, but then there were more and more and more until it sounded like explosions, bombs, and we went back home scared,” said a woman who would give her name only as Hilda. Hilda said she lives in the adjacent neighborhood of Guerrero, next to the Madero suburb where the fighting took place.

A state policeman who asked not to be identified said investigators searching the house found photographs of 14 municipal police officers and a list of other officials “sentenced to death.” He said the photos carried the men’s names, nicknames, their ranks and home addresses.

Police at the site also said they found three AK-47 rifles, a grenade, two handguns, ski masks and hundreds of bullets of different calibers.

Authorities wouldn’t comment on why they thought the house had been targeted. Some neighbors and police claimed it was a safe house used by drug smugglers or kidnappers.

“It was some kind of reprisal by drug gangs who want to control this city,” said one federal police agent. Like the rest, he asked that his name not be used. “If our names or faces appear in the news, we’re dead. That’s the way it is here.”

The fighting was the sort of violence outsiders rarely see, but soldiers and police at the scene said it was daily fare. The U.S. State Department has issued a warning urging U.S. citizens to stay clear of border areas.

“Obviously, but unofficially, gangs, mafias are trying to establish control of this city and that’s why we have this wave of violence,” Juan Antonio Jara, the interim chief state police investigator, said Thursday afternoon, hours before the night violence.

Jara blamed the violence on outsiders. “We know the local criminals, and we know by the type of weapons and way they operate that we’re dealing with organized crime,” said Jara, who took the post a month ago, after two of his predecessors resigned.

Since January, more than 100 people have been killed in Nuevo Laredo. Human-rights groups say that in the past two years more than 400 people have been kidnapped, including more than 40 Americans.

There have been few arrests. “We’re fighting ghosts,” said a federal agent.

Residents have taken to calling their city “east Baghdad,” or “City of Lead.” On June 8, gunmen killed city police chief Fernando Vallejo outside his office, seven hours after he took office. Six other municipal police officers have been killed this year.

“My wife said I was crazy to take this job,” new municipal police chief Omar Pimentel said Thursday afternoon. “All jobs have their risks and you have to channel the fear into positive action. Police here have suffered a lot, but what we want to do is build confidence in people, give police dignified salaries and have self-respect to reduce the potential for corruption.”

Authorities have said the violence is a war between Mexico’s two most powerful drug gangs to control key routes. Nuevo Laredo and its Texas twin, Laredo, are nearly a single city and the largest U.S. port of entry for cargo traveling between the United States and Mexico. They are located where the Pan American Highway becomes U.S. I-35, which many here call “Heroin Alley.”

Efforts to control the violence have had little effect. In January, President Vicente Fox sent at least 700 federal police officers, soldiers and special agents to Nuevo Laredo, Reynosa and Matamoros, the three most violent border cities in the state of Tamaulipas, to fight drug-cartel violence. But many believe the violence has worsened.

“People are fed up and they want one group to win this war and, maybe, finally have some peace,” said Ramon Cantu Deandar, editor of Nuevo Laredo’s El Manana newspaper. The paper stopped investigating drug crimes after two of its reporters were killed. “Drug trafficking won’t stop. But it’s time this violence stops. People are so distracted by violence, they don’t care about not having water or electricity.”

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