A besieged gunman suspected of shooting dead seven people in the name of al Qaeda boasted to police on Wednesday he had brought France to its knees and said his only regret was not having been able to carry out his plans for more killings.
In an unfolding drama that has riveted France, about 300 police, some in body armour, cordoned off a five-storey building in a suburb of Toulouse where the 24-year-old Muslim shooter, identified as Mohamed Merah, is holed up.
Authorities said the gunman, a French citizen of Algerian origin, had been to Pakistan and Afghanistan, where he claimed to have received training from al Qaeda.
Merah told police negotiators he had killed three French soldiers last week and four people at a Jewish school in Toulouse on Monday to avenge the deaths of Palestinian children and because of the French army's involvement in Afghanistan.
He has no regrets, except not having more time to kill more people and he boasts that he has brought France to its knees, Paris Prosecutor Francois Molins, part of the anti-terrorist unit leading the investigation, told a news conference.
The gunman, who filmed his killings with a small camera, had already identified another soldier and two police officers he wished to kill, Molins said. The gunman had repeated promises to surrender this evening to members of the elite RAID unit surrounding the house, which had been evacuated of its other residents.
He has explained that he is not suicidal, that he does not have the soul of a martyr and that he prefers to kill but to stay alive himself, Molins said.
President Nicolas Sarkozy, who is running for re-election in five weeks time, paid tribute at a ceremony in an army barracks in Montauban, near Toulouse, to the three soldiers of North African origin killed last week. A fourth soldier of Caribbean origin is in a coma.
Our soldiers have not died in the way for which they had prepared themselves. This was not a death on the battlefield but a terrorist execution, Sarkozy said, standing before three coffins draped in the French flag after paying his respects to bereaved relatives.
We must remain united. We should in no way yield to discrimination or vengeance, he said in his eulogy. France can only be great in unity. We owe it to the memory of these men, we owe it to the three murdered children, to all the victims.
Sarkozy's appeal for national unity came after far-right leader Marine Le Pen, a rival presidential candidate, said France should wage war on Islamic fundamentalism.
Interior Minister Claude Gueant said Merah was a member of an ideological Islamic group in France but this organisation was not involved in plotting any violence.
He said Merah had thrown a Colt 45 pistol of the kind used in all the shootings out of a window of the block of flats, where he has been living, in exchange for a mobile phone, but was still armed.
Two police officers were injured in a fire fight with the gunman after police swooped at 3 a.m. local time (0200 GMT).
Police sources said they had conducted a controlled explosion of the suspect's car at around 9:00 a.m. (0800 GMT) after discovering it was loaded with weapons. Officials said police had also arrested Merah's girlfriend and his brother, who is also known to authorities as a radical Islamist.
Gueant said Merah had contacted the first soldier he attacked on the pretext of wanting to buy his motorcycle.
Investigators identified the IP address he used - that of his mother - because he was already under surveillance for radical Islamist beliefs.
We knew, and that is why he was under surveillance, that he had travelled to Afghanistan and Pakistan, the minister said.
Merah's telephone was tapped from Monday and with the help of other information the police decided to raid his house. Merah has a criminal record in France, Gueant said, but nothing indicating such an attack was possible.
A police source told Reuters that investigators had also received a tipoff from a scooter repair shop in Toulouse where the gunman asked to change the colour of the Yamaha scooter used to flee the shootings and to remove a GPS tracker device.
A group of young men from Merah's neighbourhood described him as a polite man of slight build who liked football and motorbikes and did not seem particularly religious.
He isn't the big bearded guy that you can imagine, you know the cliché, said Kamal, who declined to give his family name. When you know a person well you just can't believe they could have done something like this.
Sarkozy had been informed of the standoff early in the morning, officials said. The president's handling of the crisis could be a decisive factor in determining how the French people vote in the two-round presidential elections in April and May.
The Jewish victims from the Ozar Hatorah school were buried in Jerusalem on Wednesday. Parliament speaker Reuben Rivlin said in his eulogy at the hill-top cemetery that the attack was inspired by wild animals with hatred in their hearts.
Authorities said on Tuesday that the gunman had apparently filmed his rampage through the school with a camera strapped to his body. He wounded Rabbi Jonathan Sandler as he entered the building, then shot an 8-year-old girl in the head, before returning to kill Sandler and his two children, who had rushed to his side, at point blank range.
Immigrants and Islam have been major themes of the campaign after Sarkozy tried to win over the voters of Le Pen, who accused the government on Wednesday of underestimating the threat from fundamentalism.
We must now wage this war against these fundamentalist political and religious groups that are killing our children, that are killing our Christian children, our Christian young men, young Muslim men and Jewish children, she told the i-Tele news channel, questioning the decision to deploy in Afghanistan.
But leaders of the Jewish and Muslim communities said the gunman was a lone extremist.
France's military presence in Afghanistan has divided the two main candidates in the election. Socialist frontrunner Francois Hollande has said he will pull them out by the end of this year while Sarkozy aims for the end of 2013.
(Additional reporting by Brian Love, Daniel Flynn and Geert de Clercq in Paris; Writing by Daniel Flynn; Editing by Giles Elgood)