Hooded gunmen have fired on police in the French city of Marseille where the Prime Minister Manuel Valls had been due to visit.
An armed gang of up to 10 people targeted a police car with Kalashnikov rifles on the notorious La Castellane housing estate on Monday morning.
Some 7,000 residents in the area were put lockdown and ordered not to go outside.
A creche was also evacuated as police special forces were sent into the sealed-off estate, which is plagued by drug gangs and violence.
A helicopter circled overhead.
Local politician Samia Ghali tweeted that La Castellane is in a "state of siege", adding it is was her "worst nightmare".
She later told BFMTV: "It's got everything - prostitution, drugs trafficking, violence.
"It's a dangerous cocktail and we saw evidence of that today."
French journalist Stefan De Vries told Sky News: "The area is sealed now and heavily armed squad teams are in the area.
"There is a very high murder rate but almost all the murders are gang-related. Very few victims are civilians."
Sky's Foreign Editor Sam Kiley said: "The gap between organised crime and terrorists is quite blurred because of the access to weapons."
Mr Valls had been due in the city to hail the "excellent" results of a crime crackdown in France's second largest city.
France has been on high alert in the wake of recent terror attacks in Paris that left 20 people dead, including the gunmen.
Last week, two soldiers protecting a Jewish centre were wounded in a knife attack in the city of Nice.
The shooting in Marseille comes as a senior French official said the country was stepping up its efforts to combat extremism.
In response to the threat posed by returning jihadists, Elisabeth Guigou, president of the French National Assembly's Committee on Foreign Affairs, said France is ramping up security.
Speaking at the Munich Security Conference, she said the measures included reinforcing border inspection and setting up hotlines.
"We estimate that about 1,300 French people or residents in France have been concerned by going back and forth to Syria or to Iraq, so that's quite a lot of people to keep an eye on," said Ms Guigou.
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