The incident unfolded around 5 p.m. local time in the port city of Le Havre and authorities quickly blocked off the area, police said.
Local media, citing authorities, reported that authorities are concerned that there may be explosives involved.
A senior police union official who was in contact with officers in negotiations said the suspect is a 34-year-old male and is on a security agency watchlist.
“We’ve identified him. He’s on a watchlist. We know that he has been radicalized and suffers a serious psychiatric illness,” SGP Unite police union chief told Reuters.
However, the official did not confirm French media reports that he had put forth confusing demands. The official could not be identified by name, in keeping with French custom.
RAID, a special intervention unit, was on the scene. The unit trained to negotiate to try to defuse tense situations, and move in if that fails.
At least two people have been freed uninjured.
This is a developing story. Check back for updates.
The Associated Press contributed to this report.