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Three people dead, at least 12 wounded after shooting near French Christmas market.

The death toll in a shooting near the picturesque Christmas market in the historic French city of Strasbourg has been revised to three, with at least 12 people injured.

“He fought twice with our security forces,” French Interior Minister Christophe Castaner told a news conference held in the city.

Castaner said 350 security agents were hunting for the gunman who fled the scene and that France was raising the security threat level and would bolster the protection of Christmas markets elsewhere and strengthen border controls.

With France still on high alert after a wave of attacks commissioned or inspired by Islamic State militants since early 2015, the counter-terrorism prosecutor has opened an investigation.

The suspect was identified by police as Strasbourg-born Chekatt Cherif, 29.

A source close to the operation earlier said the suspect had been cornered and shots had been fired. But an hour or so later, a police source said he was still on the run.

The attack began at about 8 pm local time (0600 AEDT) as stallholders prepared to close down and the city’s restaurants filled up. Bystanders were swiftly ushered into nearby shops.

The European Parliament, which is sitting in Strasbourg this week, was put into lockdown.

Strasbourg lies on the west bank of the Rhine river. On the opposite side, German police tightened border controls, officials said.

Interior Minister Christophe Castaner said the gunman was known to security services, and the local prefecture said he was on an intelligence services watchlist.

A Reuters reporter was among 30 to 40 people being held in the basement of a supermarket for their own safety, waiting for police to clear the area. Lights were switched off and bottles of water handed out.

The Paris prosecutor said the motive for the attack was not known. No one immediately claimed responsibility but the US-based Site intelligence group, which monitors jihadist websites, said Islamic State supporters were celebrating.

Sources familiar with the police operation said the suspect’s home had been raided earlier in the day in connection with a robbery during the summer, but he was not found there.

President Emmanuel Macron was being updated on events, an Elysee Palace official said.

City authorities said the market and all cultural attractions would be closed on Wednesday.

European security agencies have feared for some time that Islamist militants who left Europe to fight for Islamic State in Syria and Iraq would return after the jihadist group’s defeat, with the skills and motivation to carry out attacks at home.

France has been grappling with how to respond to both homegrown jihadists and foreign militants following attacks in Paris, Nice, Marseille and beyond since 2015.

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