A self-proclaimed Al-Qaeda militant took hostages at a bank in the French city of Toulouse on Wednesday, close to where serial killer Mohamed Merah lived and was shot dead by police in March.
The man fired a shot and took four people hostage, including the bank's manager, in the southern French city and wants to negotiate with the elite RAID police unit that killed Al-Qaeda-inspired Merah, police said.
"We're taking measures so we can start a dialogue" with the hostage taker, Toulouse prosecutor Michel Valet said at the scene where police have set up a 200-metre (yard) cordon around the bank.
No one has been injured, a policeman who asked not to be named told AFP.
"We don't yet know if this is a robbery that went wrong or if (the hostage taking) is a premeditated act," a police source told AFP.
The man calls himself "Boumaza" and has a criminal record, police said.
He entered the bank and insistently asked for money and staff did not take him seriously, police told AFP. He then produced a gun and took everyone hostage.
An employee at the bank answered the phone when an AFP journalist called and confirmed that she was inside the besieged bank.
"I'm answering clients' phone calls," she said in a calm voice but refusing to discuss the situation inside the bank.
Parents of pupils at a nearby school have been sent a text message telling them to pick up their children, witnesses said, and rapid-intervention GIPN police units have been dispatched from southern cities Bordeaux and Marseille.
The RAID unit that shot dead Merah after he went on a killing spree is based in Paris, hundreds of kilometres to the north.
The CIC bank and Merah's former flat are within five hundred metres of each other in Toulouse's Cote Pavee neighbourhood, east of the city centre.
Merah was killed at the end of a 32-hour siege of his flat after he shot dead seven people - three soldiers, and three children and a teacher at a Jewish school in Toulouse - in a wave of killings that shocked the country.
Toulouse, a city of around 500 000 people, lived in fear while police hunted the killer before he was identified as Merah. His neighbourhood has struggled to shake off the stigma of being associated with him.
"We're going through the same thing as three months ago," said Maria Gonzalez, a mother with two children who cannot go home because of the police cordon.
"We used to be worry-free in the neighbourhood, but since the Mohamed Merah problem, we're worried. It's happening again, it's starting to scare me," she said.
The 23-year-old who claimed to be an Al-Qaeda militant filmed himself carrying out the attacks and reportedly confessed to police before he was shot dead.
A petty criminal of Algerian origin, Merah reportedly spent time in Pakistan and Afghanistan but it is not known if he attended militant training camps.
The then interior minister Claude Gueant said that Merah was part of a group of around 15 followers of Islamic fundamentalist Salafist ideology in Toulouse.
Riding a powerful scooter, Merah shot dead three French troops in cold blood, reportedly because of French military interventions abroad.
He told negotiators the Jewish school killings were to avenge Palestinian children killed by Israel.
French intelligence was heavily criticised for failing to keep tabs on Merah despite the fact he travelled to known hotbeds of militant Islam.
Coming at the height of the French presidential election, the killings prompted then president Nicolas Sarkozy to compare the national trauma to that of the United States after the September 11, 2001 attacks.
A conservative Toulouse imam, Abdelfattah Rahhawi, warned at the time that French Muslim youths should not fall into the same trap as Merah through an erroneous reading of the Koran or by being led astray by fanatics.
France has the largest Muslim population in Europe.