* Military coup successful, president arrested - sources

* Gunfire around presidential palace kills three -sources

* U.S. says monitoring situation

Mutinous troops led by an army major captured Niger's President Mamadou Tandja on Thursday after storming his palace in a four-hour gun battle that killed at least three soldiers, military sources said.

Political tensions had been high in the west African uranium exporter in recent months after Tandja changed the constitution to extend his rule last year, a move that drew widespread criticism at home and led to international sanctions.

The coup leader has succeeded. It is being led by Major Adamou Harouna, one Nigerien military source said. The president and the ministers were being held not far from the presidential palace in the capital Niamey, the sources added.

There was no official statement from the coup perpetrators but state radio interrupted normal programmes to broadcast military music by early evening.

Earlier in the day, plumes of smoke were seen rising from the palace amid heavy gunfire after soldiers in armoured vehicles attacked the building where Tandja was holding a cabinet meeting.

Hospital sources said at least three soldiers were killed in the clashes. Earlier, a Reuters witness saw five injured soldiers at a hospital.

Calm has returned and tanks have taken up positions close to the barracks, where Tandja and members of his government were rumoured to be held, a Niamey resident told Reuters.

The resident, who asked not to be named, said a soldier living next door had told her not to worry as there would be no more resistance since the entire army supported the coup.

Tandja drew criticism and sanctions after dissolving parliament and orchestrating a constitutional reform in 2009 that gave him added powers and extended his term beyond his second five-year mandate, which expired in December.

TENSIONS HIGH

Tandja justified the move, which removed most checks on his authority, abolished term limits, and gave him an initial three more years in power without an election, saying he needed extra time to complete large-scale investment projects.

In Washington, State Department spokesman P.J. Crowley said the situation was very fluid in Niger and the United States was closely monitoring it.

Clearly, we do not in any way, shape or form, you know, defend violence of this nature, but clearly we think this underscores that Niger needs to move ahead and with the elections and the formation of a new government, he said.

West Africa's regional bloc ECOWAS suspended Niger and the United States terminated trade benefits, while former colonial power France also criticised Tandja last year.

Earlier on Thursday, ECOWAS, which has for months been attempting to broker a solution to the deadlock between Tandja and the opposition, said it would impose further sanctions on any group that took power unconstitutionally.

Despite the political turmoil, Niger has attracted billions of dollars in investment from major international firms seeking to tap its vast mineral wealth, including French nuclear plant builder Areva and Canada's Cameco .

Areva, which has been digging uranium in Niger for decades, is spending 1.2 billion euros ($1.79 billion) on a new mine, and China National Petroleum Corp signed a $5 billion deal there last June.

One such firm said earlier the situation was heating up but it was unclear what the impact would be for their employees.

Tandja has faced a rebellion by northern Tuareg-led rebels, though analysts said they were unlikely to be involved.

Niger Canada