Warring Mexican gangs fought a pitched battle with bazookas and grenades late Thursday in a middle-class neighborhood of Nuevo Laredo, terrorizing citizens who say they live in a “Baghdad-like” war zone.

The battle was so fierce that the U.S. ambassador in Mexico City announced Friday that he was closing the consulate here until at least Aug. 8. The announcement called the battle “an alarming incident” that involved “unusually advanced weaponry.” U.S. Ambassador Tony Garza said U.S. officials will use the week to assess security.

For more than 30 minutes Thursday, the sharp report of automatic-weapons fire, punctuated by thumping explosions, could be heard throughout this border city. After the fighting had ended, the street where the confrontation had taken place bore all the signs of combat. The house at the fighting’s center was riddled with holes the size of melons. Part of it had collapsed. A building across the street was pocked with holes, indicating a fierce response with heavy weapons.