The Taliban claimed responsibility for a car bomb attack on the Spanish embassy in Kabul on Friday, further dimming hopes for peace talks with moderate elements of the Islamist insurgent movement touted just days ago by President Ashraf Ghani.

Gunfire was reported immediately following the explosion, which the Taliban said was targeted at a guest house attached to the embassy in a heavily protected area of the capital close to many foreign embassies and government buildings.

"The only information we can confirm is that there has been an explosion in the embassy," a spokesman at the Spanish Foreign Ministry in Madrid said. He had no reports of casualties.

Security forces with armoured vehicles were deployed around the scene, with at least three insurgents involved in the attack, according to one police official.

At least seven people were brought to a hospital operated by the aid group Emergency, 700 metres (yards) from the Spanish embassy, according to a tweet from the organisation.

A Taliban spokesman said the attack had targeted "an invader's guest house".

Spain, which contributed to the international force in Afghanistan, withdrew the last of its troops in October although a few officers remain at the headquarters of NATO's Resolte Support Mission in Kabul.

A Taliban attack in the southern city of Kandahar killed 50 civilians and security forces personnel, and was only suppressed on Wednesday after more than a day of fighting.

The same day, Ghani returned from a regional peace conference in Islamabad aimed at reviving stalled peace talks with Taliban militants following several months of relative calm in the Afghan capital.

On Thursday, the head of Afghanistan's intelligence agency resigned over a row with Ghani, in a move that underlined the divisions among leaders of the country's security apparatus.

The Taliban has been caught up with a bloody internal power struggle but it has nevertheless been able to mount well-coordinated attacks on targets across the country.

Militants have stepped up the insurgency following the withdrawal of international forces from combat operations last year, achieving a series of successes, including seizing the northern city of Kunduz in September.