A man claiming to be a member of al Qaeda was shot and wounded by police in France after he took four hostages in a bank in the southwestern city of Toulouse.

The hostage-taker was shot in the leg when he emerged from the bank with one hostage, prompting him to shelter inside.

Police then stormed the bank and arrested him, freeing the last two of the initial four hostages he had taken.

The man, known to have psychological problems, had earlier released two female hostages after receiving food and water.

Police sources said the other two hostages freed during the assault were in good health.

The arrested man, aged between 25-30, took the hostages, including the bank manager, in a branch of French bank CIC around mid-morning and fired a shot after an attempted armed robbery apparently went wrong, UNSA police union official Cedric Delage said.

The man said he was not acting for money, but for religious reasons.

It was the latest drama to hit the Toulouse region after a young al Qaeda-inspired gunman, Mohammad Merah, shot dead three soldiers, a rabbi and three Jewish children in March.