THE suspect in a hostage-taking situation in southern France has been shot dead by police, a police union official said.

Three people have been killed and about a dozen wounded in a shooting and hostage-taking in a supermarket in southern France.

The reason for the shooting and hostage-taking is unclear, as is the identity of the attacker.

Prime minister Edouard Philippe said all information suggested it "seems to be a terrorist act".

France has been on high alert since a string of Islamic extremist attacks in 2015 and 2016 that killed more than 200 people.

The attacker first fired six shots at police officers who were on their way back from jogging near the city of Carcassonne on Friday morning, said Yves Lefebvre, secretary general of the SGP Police-FO police union.

One police officer had a shoulder injury but it was not serious, Lefebvre said.

The suspect then went to a Super U supermarket in the nearby small town of Trebes, about 60 miles south east of Toulouse.

Special police units were sent to the scene and local authorities blocked roads and urged residents to stay away.

Unconfirmed media reports say the assailant claimed connections to Islamic State.

French interior minister Gerard Collomb headed for the scene after talking with French President Emmanuel Macron, who is following the situation closely, according to a security official.