Four people have been taken hostage in a bank in the southwestern Toulouse by a man claiming to be an al-Qaeda operative, police say.
The man fired a shot and the director of the bank, a branch of CIC, is believed to be among the hostages, police said.
France's BFM-TV said the man had asked to speak to the same elite police unit that shot Islamist gunman Mohamed Merah .
Special police Units from the GIPN (Groupe d'intervention de la police nationale) have arrived at the scene in a bid to start negotiations with the man.
"We're taking measures so we can start a dialogue," said public prosecutor Michel Valet said.
The regional newspaper Ouest-France says the area around the bank has been sealed off by the security forces.
"We do not know if his claim about al-Qaeda is serious or a fantasy," a police union source told Ouest-France.
The neighbourhood around the bank is cordoned off. Calls to the CIC bank branch went unanswered.
BFM also reported that four hostages were inside - the bank branch director and three others - and that the hostage-taker wanted the elite RAID police force to come negotiate with him.
The RAID police force led a 32-hour standoff with Frenchman Mohamed Merah, whom police say was behind the March shootings, in his Toulouse apartment. Merah was shot in the head in a gunfight at the end of the standoff.
French authorities described Merah as an Islamic radical who had trained in Afghanistan and Pakistan.
Tensions have been higher than usual in Toulouse since March, when a gunman whom police said claimed links to al-Qaida killed three Jewish schoolchildren, a rabbi and three paratroopers in the area. Those were France's worst terrorist attacks in years.