The manhunt continues for the lone gunman who killed 39 persons and injured 69 others at a high-end nightclub in Turkey's Istanbul.

The unknown assailant, who escaped amid the "chaos", opened fire at Reina nightclub ' title=' Reina nightclub '>Reina nightclub early on Sunday when more than 700 people gathered to celebrate the new year, media reported.

Interior Minister Suleyman Soylu confirmed a "manhunt for the terrorist is under way. Police have launched operations. We hope the attacker will be captured soon".

But as the search continued, the first funerals of those killed at the nightclub were held.

At least 28 foreigners, including two Indians, were killed in the attack, authorities said.

"The (Indian) victims are Abis Rizvi, son of former Rajya Sabha MP, and Khushi Shah from Gujarat," the Ministry of External Affairs said in a tweet.

As many as 11 Turks were killed as the horrific massacre unfolded near the Bosporus Strait, prompting a rescue operation by the Coast Guard.

Others were citizens from Israel, France, Tunisia, Lebanon, India, Belgium, Jordan and Saudi Arabia, media reported.

The motive behind the attack is not clear, but authorities suspect the Islamic State militant group, which is already linked to at least two terror attacks in Turkey last year, was involved.  

President Recep Tayyip Erdogan said such groups tried "to create chaos". "They are trying to demoralise our people and destabilise our country."

The banned Kurdistan Workers' Party (PKK) has distanced themselves from the killings, with the group's Murat Karayilan saying they would "never target innocent civilians".

At least three of the injured were in critical condition.

Istanbul was already on high alert with some 17,000 police officers on duty in the city, following a string of terror attacks in recent months.