UPDATE: Police surround Charlie Hebdo shooting suspects
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.
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.
At the scene: Piers Scholfield, BBC News, Dammartin-en-Goele
It's a dramatic scene. The area around the small town of Dammartin is rapidly filling up with thousands of French police and anti-terror forces.
Several Puma helicopters are hovering over the area. Hundreds of police cars and armoured vehicles have arrived. Press were rapidly moved on from the area amid warnings of danger to onlookers.
Huge convoys of police line the main N2 highway.
There are now reports of flights being cancelled at nearby Charles de Gaulle airport.
Residents warned
The suspects are said to be holed up in a small printing business named CTD, a source close to the investigation told AFP news agency.
In Dammartin, witnesses say police are protecting people in buildings close by.
Officers from the elite GIGN unit have told people working nearby to stay inside and turn lights off while the operation is going on.
People in the area say police helicopters began arriving around 08:45 (07:45 GMT) followed by convoys of armed officers.
Some of those in premises in the industrial area where the suspects are cornered have been evacuated.
Police and military helicopters continue to hover low over the area, while lines of armed officers are guarding the edge of the national highway were traffic continues to flow.
The security situation has affected flights at the main airport in Paris, which is in the vicinity. Officials at Paris Charles de Gaulle say they have changed landing and take-off patterns for aircraft in the light of the security situation.
Meanwhile, police are said to have have identified a suspect in Thursday's fatal shooting of a policewoman in Montrouge, south of Paris.
AFP news agency quotes a source close to the investigation as saying that two people in his immediate circle have been taken into custody.
'Al-Qaeda'
It is believed the gunmen were angered by the satirical magazine's irreverent depictions of the Prophet Muhammad.
During the attack on Charlie Hebdo, the attackers are said to have shouted "We are al-Qaeda, Yemen", an apparent reference to the al-Qaeda in the Arabian Peninsula group (AQAP).
In the US, a senior official has told reporters that one of the two brothers alleged to have carried out the attack, Said Kouachi, spent "a few months" training in Yemen with the group.
Said and his younger brother, convicted terrorist Cherif Kouachi, were on a US no-fly list before the attack, a US counter-terrorism official told the New York Times.
See article published January 7, 2015
Charlie Hebdo: Major manhunt for Paris gunmen
A major manhunt has been launched for three gunmen who shot dead 12 people at the office of the French satirical magazine Charlie Hebdo. Eight journalists, including the magazine's editor, and two policemen were among the dead.
French media have named the suspects, quoting police sources.
Tens of thousands of people have attended protests over the attack - the deadliest the country has seen in decades - across France.
President Francois Hollande called it a "cowardly murder" and declared a day of national mourning on Thursday.
He said the country's tradition of free speech had been attacked and called on all French people to stand together. "Our best weapon is our unity," Mr Hollande said in a televised address late on Wednesday.
Security has been stepped up across France in the wake of the attack, with Paris placed on the highest alert.
The satirical weekly has courted controversy in the past with its irreverent take on news and current affairs. It was firebombed in November 2011 a day after it carried a caricature of the Prophet Muhammad.
The attack took place as the magazine was holding its weekly editorial meeting. French media have named three cartoonists killed in the attack as Cabu, Tignous and Wolinski, as well as Charlie Hebdo contributor and French economist Bernard Maris.
Charlie Hebdo editor Stephane Charbonnier, 47, had received death threats in the past and was living under police protection.
Those killed include economist Bernard Maris, prominent cartoonists Wolinski and Cabu, Charlie Hebdo editor Stephane Charbonnier and cartoonist Bernard VerlhacCartoonist Corinne Rey, said the hooded gunmen entered the building after forcing her to enter the code to open the door.
"They said they belonged to al-Qaeda," she said, adding they had spoken in fluent French.
Eyewitnesses said they heard as many as 50 shots fired by the attackers both inside the Charlie Hebdo office and on the streets outside.
The gunmen were captured on amateur video shooting one injured police officer at point blank range in the head on the pavement outside.
They were heard shouting "we have avenged the Prophet Muhammad" and "God is Great" in Arabic ("Allahu Akbar").
Police said the masked gunmen fled to northern Paris, before abandoning their car and hijacking a second one.
The Paris prosecutor, Francois Molins, said 11 people had been wounded in the attack, four of them seriously.
He told reporters all efforts were being made to find those responsible, without giving any details about the investigation.
"The investigations have been numerous and in-depth, because of course, the police have been mobilised, and these inquiries are going on."
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Is it that in the same way that a believer would want others to follow God's path, and an atheist would want them to un-follow that path?