French police have surrounded a building in a northern town where two men suspected of the Charlie Hebdo massacre are said to have a hostage, reports the BBC.
On the third day of a manhunt, shots were fired and there are reports of injuries in Dammartin-en-Goele, 35km (22 miles) from Paris.
The suspected Islamists are reported to have said they are prepared to die.
Twelve people were shot dead and 11 injured in the attack on the satirical magazine in the centre of Paris.
The suspects, two brothers who intelligence officials have linked to militant groups, shouted Islamist slogans during the shooting and then fled Paris in a hijacked car, heading north.
It appears that on Friday they hijacked another car in the town of Montagny-Sainte-Felicite before travelling on to Dammartin.
The car's owner recognised them as brothers Cherif and Said Kouachi, the key suspects.
In a televised statement interior minister Bernard Cazeneuve confirmed the men being sought on Friday were those wanted for the Charlie Hebdo attack.
"An operation is under way which is set to neutralise the perpetrators of the cowardly attack carried out two days ago," he said.