A man claiming to be an Al-Qaeda militant took four hostages at a bank in the southern French city Toulouse on Wednesday and wants to negotiate with an elite police unit, police said.

The man entered the bank around 0900 GMT, fired a gun and wants to talk to the RAID police unit that shot dead Al-Qaeda-inspired gunman Mohamed Merah in March at his flat, which is in the same neighbourhood as the bank.

Merah was killed at the end of a 32-hour siege of his flat after he shot dead seven people -- three soldiers, and three children and a teacher at a Jewish school in Toulouse -- in a wave of killings that shocked the country.

The 23-year-old who claimed to be an Al-Qaeda militant filmed himself carrying out the attacks and reportedly confessed to police before he was shot dead.