French police have shot and wounded a man claiming to be a member of al Qaeda after he took four hostages in a bank in the southwestern city of Toulouse, prosecutor Michel Valet said.
The hostage-taker, known by police to have a record of psychological problems, was shot after he emerged from the bank with one hostage, prompting him to return inside for shelter, police sources said.
Elite police units then stormed the bank and arrested him, freeing the last two of the four hostages he had taken after an almost seven-hour stand-off.
"The man was overpowered ... he has two significant injuries one on the left hand and the other on the right thigh," Valet told reporters.
The man had earlier released two female hostages after receiving food and water in the early afternoon. All four hostages were in good health, Valet said.
The 26-year-old took the hostages, who included the bank manager, in a branch of CIC bank around mid-morning. He fired two rubber bullets from his gun earlier in the day, Valet said.
"His demands were muddled. We have elements to make us think that we are dealing with someone who was suffering from serious psychological troubles and this act was linked to that. It is difficult to say what made him do this given his religious claims were poorly defined," the prosecutor said.
It was the latest drama to hit the Toulouse region after a young al Qaeda-inspired gunman shot dead three soldiers, a rabbi and three Jewish children in March.
The hostage-taker had asked for the elite RAID commando unit to come to the scene - the same squad which shot dead 23-year-old gunman Mohammed Merah in March after a long standoff at his home, which was just metres from the site of Wednesday's siege.
"By choosing to carry this out where the Merah affair took place, it shows that this makes sense for him and has a particular symbolism," said Christophe Caupenne, a former commando at the RAID unit. "The Merah affair was a psychological trigger for him so at some point he would act."
Toulouse, a university town which does not have a reputation as a hotbed of religious or militant tension, has seen a number of short-lived hostage situations in recent weeks, including a drama last week at a local weather forecasting office, but none resulted in casualties.
Anti-terrorist police were brought in from the nearby cities of Bordeaux and Marseille and the area was sealed off.
A bomb disposal team had been sent to the scene at one stage after the man told them he had explosives.
Britain and Spain have been hit by al Qaeda attacks over the past decade, following the U.S.-led NATO intervention in Afghanistan, but France has not seen a major attack on its soil since the mid-1990s.
At that time the Algerian Armed Islamic Group (GIA) carried out a spate of attacks, including the bombing of a commuter train in 1995 which killed eight people and injured 150.
The rise of al Qaeda has posed a new challenge to French security services more used to watching Algerian-related militants. France raised its terrorism alert in late 2010 after al Qaeda founder Osama bin Laden singled the country out as one of the worst offenders of Islam.
There have been a number of kidnappings of French citizens abroad, and officials say several plots to launch attacks on French soil have been foiled by intelligence services.