EDITORS PLEASE NOTE: EDIT CONTAINS CONVERTED 4:3 MATERIAL

Indonesian police shot dead five suspected militants in an overnight raid on the resort island of Bali.

The national counter-terrorism agency said the militants had identified and surveyed several targets for attack.

(SOUNDBITE) (Bahasa Indonesia) INDONESIA POLICE SPOKESMAN, SAUT USMAN NASUTION SAYING:

"This group had targeted several locations in Bali for terrorism acts, such as cafes, and were looking to rob for gold by targeting foreign currency shops."

Police added the suspected militants were about to stage armed robberies, to fund their cause.

The group was linked to the banned Jemaah Islamiah group.

Police said all the suspects died during the raids because they refused to obey orders or opened fire on police officers.

The bodies were moved to Denpasar airport to be flown to Jakarta, where autopsies are expected to be carried out.

Witnesses said they heard gunshots, but thought it was nothing.

(SOUNDBITE) (English) UNIDENTIFIED ITALIAN MAN WHO HEARD SHOOTING, SAYING:

"The first time, bum, bum, bum, bum, bum, bum. It stopped. Then more. Bum bum bum bum bum. I think, oh God, it must be children, but I don't understand nothing."

(SOUNDBITE) (English) BRITISH TOURIST STAYING AT SENIA HOTEL, KERRY SHORTEN, SAYING:

"We thought, we just presumed it was fireworks, but when I think back, it definitely sounded a bit different to that. And then, later on, the staff here told us what happened, and we walked up. Just a lot of people. A lot of police. A lot of people. Yeah, it was kind of like an Oga-Oga parade."

Oga-Oga parade refers to the celebrations on the eve of Nyepi, or the annual Day of Silence marking Bali's Hindu New Year.

Australian media quoted a senior police officer as saying it was possible the group had been planning to carry out the attacks on the eve of their new year.

Sophia Soo, Reuters.