French police have identified a 29-year-old man suspected of killing two people in a shooting near a Christmas market in Strasbourg.
Officials said Cherif Chekatt has a lengthy criminal record including several serious cases of robbery.
Prosecutor Remy Heitz said witnesses heard the gunman shout “God is great” in Arabic during the shooting spree that also left 12 people wounded.
Mr Heitz said the gunman was shot in the arm during an exchange of fire with soldiers and then took a taxi to another part of the city. He said the man was armed with a handgun and a knife.
Previously, French authorities said the gunman killed three people but Mr Heitz said two people were confirmed dead while the third was brain dead.
He also said police found a grenade, a rifle and four knives during a search on Tuesday morning of Chekatt’s house in an investigation over a suspected murder.
Authorities have launched a terror investigation, with interior minister Christophe Castaner saying 350 officers are hunting for the gunman who was known to security services.
Mr Castaner said the gunman, from the city in eastern France, exchanged fire with law enforcement as he “sowed terror”.
The French government has increased its security alert system Vigipirate to its highest level.
Mr Castaner said: “Three hundred and fifty police and gendarmes are currently on the ground to apprehend the suspect, supported by two helicopters, the RAID (French anti-terror police), the BRI (anti-gang brigade) and the Sentinel force.
“The government has decided to move the security level to “Emergency Attack” with stricter controls at the borders, and the implementation of reinforced controls on all the Christmas markets that are taking place in France to avoid the risk of copycat attacks.”
The suspect was shot and injured by soldiers guarding the Christmas market but he escaped in a taxi, BFM TV said.
He was said to have entered central Strasbourg via the Corbeau bridge to the south of the city centre, before heading to Rue des Orfevres, a popular shopping street close to the cathedral, where he opened fire at around 8pm local time (7pm GMT).
In the aftermath, residents were urged to stay indoors and the nearby European Parliament was placed on lockdown.
Antonio Tajani, the president of the parliament, said: “This parliament will not be intimidated by terrorist or criminal attacks. Let us move on. We will continue to work and react strengthened by freedom and democracy against terrorist violence.”
Fans attending a basketball game were also kept behind and began to sing the French national anthem in “homage to the victims”.
The Christmas market was closed on Wednesday and flags lowered to half-mast.
The mayor of Strasbourg Roland Ries tweeted: “A book of condolences will be opened at the Town Hall from today.
“I want to thank the people of Strasbourg and visitors to the city for their patience and understanding.”
President Emmanuel Macron, who attended a Interdepartmental Crisis Centre meeting, left without speaking to reporters but later tweeted the “solidarity of the entire nation” is with Strasbourg, the victims and their families”.
France has been hit by several extremist attacks in recent years, including the 2015 Paris shootings which left 130 people dead and wounded hundreds more.
In 2016 a truck was driven into Bastille Day crowds in Nice, killing 86 people and leaving hundreds injured.
Twelve people were killed and 48 were injured when a man drove a truck into crowds at a Christmas market in Berlin in 2016.