Robbers in Brazil blasted their way into a gem-cutting plant Sunday, fought a gun battle with police then fled with nine hostages, prompting a massive manhunt, officials said.

Three of the assailants died in the assault in the state of Rio Grande do Sul, a military police official told AFP on condition of anonymity.

The attackers fled with their hostages into a wooded area of the town of Cotipora, with police in cars and helicopters in pursuit, the official said.

Authorities have yet to establish contact with the hostage takers, said Sergio Abreu, chief of the military in Rio Grande do Sul.

The robbers detonated dynamite to storm into the plant, then ran into police on their way out, the military police official said.

"There was an intense firefight. Three assailants died and two police were injured," the official said.

Police have recovered part of the loot, but gave no figure for its value.

As they made their escape, the attackers split into two groups. One took two people who were in a bar hostage, and the other broke into a home and abducted seven people, apparently all members of one family.

The forest where the gang fled is thick and hard to move around in, but police have it surrounded, said Altair de Freitas, deputy commander of the military in Rio Grande do Sul.

Helicopters and special operations teams with sniffer dogs are taking part in the search, he added.

News reports said the gang was made up of nine men with rifles.

The dead include Elisandro Falcao, 31, one of the state's most wanted men. He leads a gang that specializes in spectacular robberies using explosives to target banks and automated teller machines, reports said.