(Updates with higher death toll, police comments, details of attack)
MOMBASA, Kenya June 16 (Reuters) - At least 27 people were killed and 25 wounded when more than two dozen unidentified gunmen attacked buildings in the coastal Kenyan town of Mpeketoni overnight, police and witnesses said on Monday.
Militants targeted two hotels, a bank and a police station with guns and at least one explosive device. The assault on Sunday night was the latest in a string of attacks that have hurt Kenya's tourism business, a key source of foreign exchange.
"So far we can confirm that 27 people were killed in the attack. Our officers are still looking for more bodies and this number could rise," David Kimaiyo, the inspector general of Kenya's police, told Reuters.
Those killed include a policeman who worked as a driver for a police chief in the town, Kimaiyo said. Many Mpeketoni residents had fled from the attack into nearby forests, he said.
"We have not arrested anybody in connection with the attack so far," Kimaiyo said.
Police spokeswoman Zipporah Mboroki said by telephone another 25 people had been taken to a nearby hospital, most of them with bullet wounds.
A Reuters reporter in the town saw at least six bodies strewn on roads inside the town.
Mpeketoni is about 45 minutes by road and boat away from historic Lamu island, which was used as a port by Arab traders from the 14th century and which is popular with tourists.
Ten burnt-out vehicles were also seen in the area and a Kenyan bank branch was gutted in the attack, the reporter said.
Residents said there were at least 30 attackers who used two vehicles in the raid.
Two military helicopters flew over the town on Monday morning, the Reuters witness said.
Mpeketoni is more than three hours' drive from the border with Somalia, where Kenya has troops fighting al Qaeda-linked al Shabaab militants. (Reporting by Joseph Akwiri; Writing by Duncan Miriri; Editing by Paul Tait)