At least two people were killed late Saturday in a bomb attack on a restaurant popular with Westerners in central Djibouti, official sources said.
Diplomats said there were reports of two explosions outside La Chaumiere cafe, and that two employees had been killed and around 10 others wounded, many of them foreigners.
The sources said police were investigating reports that a grenade blast was followed by an attack by a suicide bomber.
The French foreign ministry confirmed that several of its nationals were slightly wounded in the attack, and the Netherlands' De Telegraaf reported that six Dutch soldiers who had been taking part in an anti-piracy mission were also lightly wounded.
Djibouti's main ADI news agency said there were several explosions around 8:00pm local time (1700 GMT) and that the area was quickly sealed off by police.
There was no immediate claim of responsibility for the attack.
The Horn of Africa nation of Djibouti, a former French colony, is home to the United States' biggest base in Africa which is used for anti-terror operations in Yemen, Somalia as well as for other operations across Africa.
France also maintains a military base in Djibouti.
Djibouti is also a key contributor of troops to the African Union force fighting Al-Qaeda-linked Shebab militants in Somalia.
Shebab have already carried out attacks against Kenya and Uganda, who also have forces in Somalia.
Djibouti's port also serves as a key base for ships taking part in international anti-piracy operations off the Somali coast.
The operation to protect international shipping lanes in the Gulf of Aden has led to a sharp drop in piracy in recent years.
In a statement on Twitter, Djibouti's Finance Minister Ilyas M. Dawaleh said the country must "remain united in the face of such barbaric acts".