A man suspected of being the gunman who killed three people near a Christmas market in Strasbourg died in a shootout with police on Thursday following a two-day manhunt.

Interior Minister Christophe Castaner initially said the dead man’s identity had not been confirmed yet.

But Mr Castaner said the “individual corresponds to the description of the person sought since Tuesday night”, 29-year-old Cherif Chekatt.

The office of the Paris prosecutor, which handles terrorism cases in France, later confirmed it was Chekatt.

Mr Castaner said the suspect opened fire on police when officials tried to arrest him.

“The moment they tried to arrest him, he turned around and opened fired. They replied,” Mr Castaner said.

A local police official, who also spoke on condition of anonymity, said the man who shot at police was armed with a pistol and a knife.

The shooting occurred in the Neudorf neighbourhood of Strasbourg, where police searched intensively earlier Thursday for Chekatt.

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Cherif Chekatt, the suspect in the Strasbourg attack (Police Nationale/AP)

Chekatt is accused of killing three people and wounding 13 on Tuesday night.

Mr Castaner said earlier Thursday that three of the injured had been released from hospital and three others were fighting for their lives.

More than 700 officers were deployed to find Chekatt, who had a long criminal record and had been flagged for extremism, government spokesman, Benjamin Griveaux told CNews television.

Asked about the instructions they received, Mr Griveaux said the focus was catching Chekatt “as soon as possible”, dead or alive, and to “put an end to the manhunt”.

Security forces, including the elite Raid squad, spent two hours searching in Neudorf on Thursday based on “supposition only” that Chekatt could have been hiding in a building nearby two days after the attack, a French police official said.

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People pay respects to the victims (Christophe Ena/AP)

Chekatt grew up in Neudorf.

Chekatt allegedly shouted “God is great!” in Arabic and sprayed gunfire from a security zone near the Christmas market Tuesday evening.

Authorities said he was wounded during an exchange of fire with security forces and a taxi driver dropped him off in Neudorf after he escaped.

Prosecutors opened a terror investigation.

So far, five people have been arrested and remanded in custody in connection with the investigation, including Chekatt’s parents and two of his brothers.

The Paris prosecutor’s office said the fifth, who was arrested Thursday at an undisclosed location, was a member of Chekatt’s “entourage” but not a family member.

Police distributed a photo of Chekatt, with the warning: “Individual dangerous, above all do not intervene.”

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A dead body lies in the doorway of a building after a shootout with police (AP)

France has raised its three-stage threat index to the highest level since the attack and deployed 1,800 additional soldiers across the country to help patrol streets and secure crowded events.

French authorities said Chekatt, born in Strasbourg, appeared on a watch list of people flagged for extremist views.

They said he had 27 criminal convictions, receiving the first at the age of 13.

The people who died in the attack included a Thai tourist, 45-year-old Anupong Suebsamarn, according to the Thai Foreign Ministry.

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French police officers patrol next to Notre-Dame cathedral of Strasbourg (Jean-Francois Badias/AP)

Five of the wounded were in serious condition, the prefecture of the Strasbourg region said.

French President Emmanuel Macron was in Brussels on Thursday for a European Union summit.

EU leaders held a minute of silence for the latest victims of a mass shooting in France.

Hundreds of people gathered in Strasbourg’s 500-year-old cathedral Thursday evening to mourn and seek comfort.

“Evil does not prevail,” Archbishop Luc Ravel said.

“And the message of Christmas has not been contradicted but rather confirmed by Tuesday’s dramatic night: Evil and good are both there, but in the end the good will have last word.”

Strasbourg’s usually busy streets were eerily empty on Thursday morning, with a heavy police and military presence.

Some lit candles and brought flowers to a makeshift memorial at the site of the attack.

“You can feel a very heavy atmosphere due all these events,” said resident Lucille Romance.

“People are in a state of shock and are avoiding getting out of their house.”

The Islamic State’s Amaq news agency claimed the gunman was a “soldier” of the group.