Four people are being held hostage by a man claiming to be an al-Qaeda operative in the French city of Toulouse -- just yards from where Islamic terrorist Mohammed Merah was shot dead by police.

At least one shot was heard soon after the man stormed a Credit Industrial and Commercial (CIC) bank branch at around 11 a.m. French time.

The director of the bank, a branch of CIC, is believed to be among the hostages, police said.  

Masked French special unit policemen leave after the assault to capture gunman Mohamed Merah during a raid on a five-storey building in Toulouse
Masked French special unit policemen (RAID) leave the scene to go to the Perignon barracks after the assault to capture gunman Mohamed Merah during a raid on a five-storey building to arrest a suspect in the killings of three children and a rabbi on Monday at a Jewish school, in Toulouse March 22, 2012. The 23-year-old gunman suspected of killing seven people in southwestern France in the name of al Qaeda, jumped from a window to his death in a hail of bullets after police stormed his apartment on Thursday. France's Interior Minister said earlier police hoped to capture Mohamed Merah, who had confessed to police negotiators to killing three soldiers as well as three Jewish children and a rabbi at a school, alive. Photo: Reuters

France's BFM-TV said the man had asked to speak to the same elite police unit that shot Islamist gunman Mohamed Merah, who died in a hail of bullets just 100 yards from the scene of today's siege.

The regional newspaper Ouest-France says the area around the bank has been sealed off by the security forces.

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We do not know if his claim about al-Qaeda is serious or a fantasy, a police union source told Ouest-France.

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 Merah, who went on a gun rampage earlier this year executing seven people, including Jewish children and three soldiers.

There are fears the hostage-taker wants revenge for the death of Merah and may be goading RAID officers into a shoot-out.

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-Qaeda killed three Jewish schoolchildren, a rabbi and three paratroopers in the area. Those were France's worst terrorist attacks in years.