'Al-Qaida' gunman takes hostages in Toulouse bank

Man is reported to have fired shot while holding up to four people in French city.

A gunman claiming links to al-Qaida was holding four employees of a bank hostage in southern France on Wednesday, not far from the former home of drive-by killer Mohamed Merah, who shot seven people dead in March, including three Jewish schoolchildren.

Police were called to the CIC bank in an eastern suburb of Toulouse after the alarm was raised around 11am local time. Police, who immediately blocked roads and surrounded the bank, said the gunman had fired at least one shot shortly before midday.

Police have made contact with the gunman, who claims to have explosives and has demanded to speak to officers from Raid, the elite special forces police brigade based in Paris. A bomb disposal team is now at the scene.

Members of Raid negotiated with Merah for 32 hours during a siege of his Toulouse flat, which they finally stormed shooting him dead almost exactly three months ago.

Merah killed three French paratroopers before turning his guns on a private Jewish school, where he killed a rabbi and three young children in March . He had also claimed links to al-Qaida.

One local woman who runs a restaurant next to the CIC bank told the magazine Paris Match she had heard a gunshot. Police have asked residents to remain at home, fearing the gunman could open fire if they attempt to evacuate the area.

"We have no idea if his claim to be linked to al-Qaida is serious or fantasy," a police union spokesman told Reuters.

On Wednesday, a school near the bank, where children were due to sit their baccalaureat examinations was evacuated.

It is the second time in a month Toulouse, known as the "pink city" because of the rose-coloured stone of its public buildings, has been the scene of a hostage-taking.

Two weeks ago a 50-year-old man brandishing a shotgun took a security guard hostage at the headquarters of Météo France, the French weather service.

An elite squad of police marksmen shot the gunman, who remains in a critical condition in hospital. The security guard escaped without injury.

Cedric Delagean, an official for the police union, Unsa, told Reuters the hostage-taking appeared to be an attempted armed robbery that went wrong.

"The most probable hypothesis is that this guy is crazy, but that doesn't make him less dangerous," a police source told journalists at the scene, who have been pushed back from the scene as police sharpshooters take up their positions around the bank.