9:00PM AEST: The suspects have reportedly told police negotiators they want to die by martyrdom.
French police are now in contact with the brothers, Cherif and Said Kouachi, who are holed up at a printing business on an industrial estate with at least one hostage.
7.30 PM AEST: HOSTAGES have been taken in a French town north-east of Paris where police were hunting two brothers over the killing of 12 people at the satirical newspaper Charlie Hebdo.
Reports say gunshots have been heard in the town of Dammartin-en-Goele and the hostages have been taken at a local printing business.
The number of people taken hostage has not been confirmed.
Officials in Paris have denied initial reports one person has been killed in a shootout in the town.
Le Figaro newspaper is also reporting that negotiations are under way with the two armed men but this remains unconfirmed.
Police hunt Paris gunmen through French countryside
THE vast manhunt for the two brothers wanted for the murderous attack on the Charlie Hebdo magazine appeared to have entered its decisive phase last night after the men fled into the French countryside.
Hundreds of elite armed police were combing woodland and fields outside a small town 60 miles north east of Paris as military helicopters circled overhead in an operation to pinpoint suspected mass killers Cherif and Said Kouachi.
After nearly 24 hours without a confirmed sighting of the brothers following the assault in central Paris which left 12 dead, the biggest counter-terrorism operation in recent French history moved its focus to the 5,000-strong community of Crepy en Valois after the brothers broke cover and held up a petrol station on one of the main routes from the capital.
Staff at the Avia service stop in Villers Cotterets in the Aisne region reported seeing rocket propelled grenades and assault rifles in the back of the Kouachis' stolen grey Renault Clio as they were forced to fill its tank at gunpoint at about 10.30am local time.
One resident said it appeared that police believed the men may fled into the nearby Foret de Retz - a vast woodland measuring 13,000 hectares.
A homeowner, who like hundreds of other residents had been ordered by police to stay inside and lock all doors, said: "The police arrived at 5pm and ordered us to stay indoors, lock up and close the shutters. I'm a bundle of nerves."
The potential endgame to the Charlie Hebdo shooting came as France suffered a second day of terrorist bloodshed as it entered three days of national mourning for the atrocity which left dead eight journalists at the satirical weekly, including its editor, and two police officers.
A female police officer suffered fatal injuries when a gunman, wearing a bulletproof vest and armed with a pistol and an automatic weapon, opened fire on her and a colleague in Montrouge, a southern suburb of Paris, shortly before 9am local time, before fleeing on foot.
The French authorities said the shooting was being treated as a "terrorist act" but no formal link had been identified with the Charlie Hebdo killings.
The second officer was seriously injured. Two people were last night being held in connection with the incident.
The suspected copycat attack came as France came to a standstill to observe a minute's silence at midday and the bells of Notre Dame in Paris tolled in memory of the victims of the Charlie Hebdo killing.
The lights on the Eiffel Tower were last night dimmed and flags were flown at half-mast across the country as politicians praised the spirit of defiance which saw 100,000 people take to the streets of French cities on Wednesday night to reject the actions of the attackers with the message "Je Suis Charlie".
But as the spirit of unity flourished, so too did the first signs of a backlash against France's Muslim population, the largest in Europe, after at least five serious attacks aimed at mosques and businesses.
Dummy grenades were thrown at a mosque overnight in Le Mans, western France, and a Muslim family were shot at in the car in the Vaucluse region of southern France.
The Prime Minister Manuel Valls said that the "real France" was in the dignity and defiance of the demonstrations not in these scattered acts of anti-Muslim violence.
"This is a time when the nation should be saying 'no" to sweeping statements, 'no' to intolerance, 'no' to hatred and 'no" to the kind of comments which traumatise the country," Mr Valls told RTL radio.
9:00 PM Thursday AEST:
There are reports the two armed suspects involved in the Charlie Hebdo shooting have been located by French police.
According to Le Parisien, two suspects who "could be" Sharif and Said Kouachi were localised this morning in Aisne, near Villers-Cotteret on the RN2
8:00 PM Thursday AEST: Another police officer dies in Paris after second shooting
PARIS has lost another police officer, as a policewoman who was shot in a separate incident in southern Paris has died.
It is not clear if the second shooting is related to the Charlie Hebdo massacre almost 24 hours earlier, although the two main suspects - brother Said Kouachi and Cherif Kouachi - are still on the run.
Seven people have been detained for questioning as police search the city for the brothers.
Meanwhile, a bomb has exploded close to a mosque near France's second largest metropolitan area Lyon.
3:00 PM AEST: Hebdo gunman surrenders, police still search for two others
FRENCH police have identified three suspects for the massacre of 12 journalists and police at the offices of French satirical magazine Charlie Hebdo as the manhunt to track then down continues.
Brothers Said Kouachi and Cherif Kouachi are believed to be French nationals of Algerian descent aged in their early 30s.
Their accomplice was named as 18-year-old Hamyd Mourad, whose nationality was unclear.
Mourad has handed himself to police in Charleville-Mézières, about 230km northeast of Paris, and surrendered.
A spokeswoman for French police said "He introduced himself and was put in custody," according a report by the New York Times.
The men are linked to a Yemeni terrorist network, officials said, but would not confirm whether that group was al-Qaeda.
A special police assault team surrounded a building in a council estate in Reims in northern France, where at least two of the suspects were believed to be hiding.
"We are going in soon. Either there is going to be a shoot out or they have got away, tipped off by social media," an officer told the French news agency AFP.
Scores of officers from the Raid assault squad had surrounded the building in Reims - the home town of the youngest of the three suspects. Police were ordering journalists and members of the public to clear the area.
Security forces had been searching for the attackers, who fled in a Citroen hatchback that is being examined by forensics teams after being dumped.
The interior minister, Bernard Cazeneuve, said three men were being hunted and said "all the means" had been mobilised to "neutralise the three criminals who have committed this barbaric act".
He added that the operation will take place as quickly as possible in order to "identify the aggressors and arrest them in a way that they will be punished with the severity that corresponds to the barbaric act they have committed".
At least 12 killed in terrorist attack on Paris magazine
AT LEAST 12 people have been killed in a shooting incident at the Paris office of French satirical weekly Charlie Hebdo, police have confirmed.
Witnesses said that at least two gunmen were involved, and that they were seen armed with AK-47s and pump-action shotguns. The attackers themselves are still on the run.
MORE ON PARIS ATTACK:
Four of France's best-known satirical cartoonists, including the magazine's editor, were among the dead. A further 12 people were injured, some gravely, in what is the worst terrorist incident in France for 40 years.
Police said that at least 10 of the killings took place in the initial attack inside the building, or died within minutes because of the seriousness of their injuries.
As the gunmen left in a black Citroën hatchback, they met with a police car which was part of the permanent protection given to the magazine after it was firebombed in 2011.
The attackers got out of their vehicle and opened fire, killing two officers.
Video footage posted to social media showed armed gunmen running through the streets of Paris, shooting with automatic weapons and shouting "Allahu Akbar".
According to an eye-witness, one of the gunmen shouted: "The Prophet is avenged."
GRAPHIC CONTENT: Video shows injured victim being shot
Paris has raised its terror alert to the highest setting in the aftermath of the attack, while a manhunt has begun for those involved.
A social media post from France's AFP news agency reported that the men may also have been armed with at least one rocket-launcher, though this was not corroborated by other reports.
France's interior minister Bernard Cazeneuve said police were looking for "three criminals", though it was not clear how many took part in the shooting itself.
All resources had been mobilised, he said, "to neutralise those who committed this barbaric act".
A Charlie Hebdo cartoonist who survived the attack described how two "hooded and armed men" forced her to enter the code letting them into the magazine's offices.
Corinne "Coco" Rey told the French newspaper L'Humanite that the attack lasted five minutes.
She said the assailants "spoke perfect French" and "claimed to be from al-Qaeda".
The French President Francois Hollande has travelled to the scene in Paris's 11th arrondissement after what he called a "terrorist attack of the most extreme barbarity".
He said it was the latest in a series of terrorist incidents on French soil, and that the nation was in a state of shock.
"This is a difficult moment for France," Hollande told reporters. "We have prevented several attacks. We knew that we were still under threat because we are a country that cherishes freedom."
The urgent priority for officials on Wednesday afternoon remained tracking down those responsible. Paris police said the gunmen abandoned their car at the northern Porte de Patin and escaped.
Mr Cazeneuve said the attack had set in motion protective measures across "all French territories", including bolstered security at houses of worship, stores, media offices and transportation hubs.
Schools across the French capital closed their doors, while top government officials held a meeting of the national emergency committee.
President Hollande has scheduled a national TV address to update the public on the situation later on Wednesday evening.
According to a journalist at the scene, at least one of the police officers killed had been assigned to protect Mr Charbonnier personally. In 2013 he was included on a "most wanted" list published by Inspire, al-Qaeda's terrorist propaganda magazine.
Two other cartoonists, Georges Wolinski and Bernard Verlhac, or "Tignous", were also reported as having been killed.
Charb had previously defended a controversial series of cartoons depicting the Prophet Mohammed in 2012, saying: "Muhammad isn't sacred to me. I don't blame Muslims for not laughing at our drawings. I live under French law. I don't live under Koranic law."
Charlie Hebdo's editor-in-chief Gerard Biard escaped the carnage because he was in London.
He told France Inter: "I don't understand how people can attack a newspaper with heavy weapons. A newspaper is not a weapon of war."
Mr Biard said he did not believe the attack was linked to the magazine's latest front page, which featured novelist Michel Houellebecq.
The writer's new novel "Submission", released in France on Wednesday, has caused controversy after it was described by critics as an "Islamophobic scare story".
Yet the magazine had not received any recent threats of violence, Mr Biard said: "Not to my knowledge, and I don't think anyone had received them as individuals, because they would have talked about it. There was no particular tension at the moment."
A year earlier, the magazine's offices were firebombed after a spoof issue featured a caricature of Mohammed on its cover. The edition "invited" Mohammed to be its guest editor.
According to one report, journalists were discussing a new Islam-themed edition on Wednesday when the gunmen burst in.
The latest post made by the Charlie Hebdo Twitter account was a picture of the Isis militant group leader, Abu Bakr al-Baghdadi.
Jyllands-Posten, the Danish newspaper which sparked protests when it published cartoons of the Prophet Mohammed in 2005, has increased its own security in the wake of the Paris shooting, France 24 reported.
Charlie Hebdo re-published the same cartoons in 2006.
One witness to Wednesday's shooting, Gilles Boulanger, who works in the same building as the Charlie Hebdo offices, likened the scene to a war zone.
He told the BBC: "A neighbour called to warn me that there were armed men in the building and that we had to shut all the doors.
"And several minutes later there were several shots heard in the building from automatic weapons firing in all directions.
"So then we looked out of the window and saw the shooting was on Boulevard Richard-Lenoir, with the police. It was really upsetting. You'd think it was a war zone."
Another witness, Benoit Bringer, told TV station France Info: "We heard shouting in the street. We saw hooded men carrying Kalashnikovs enter the building. We called the police. After a few minutes we heard heavy firing, a lot of firing. We went upstairs onto the roof.
"After about 10 minutes we saw two armed men come out into the street. Three policemen arrived on bikes but had to leave because the men were armed. There was a lot more shouting in the street, a lot more gunshots. The attackers took off in a car."
David Cameron led the British response to the unfolding incident, condemning the attack on Twitter.
"The murders in Paris are sickening," he posted. "We stand with the French people in the fight against terror and defending the freedom of the press."
Philip Hammond, the British Foreign Secretary, wrote: "Appalled to hear news of apparent terrorist attack in Paris. My thoughts are with the family and friends of those killed."
A statement from the White House also condemned the attack "in the strongest possible terms". "The US stands ready to work closely with the French," it said.
Germany's Chancellor Angela Merkel called it an "attack on freedom of speech".
"This abominable act is not only an attack on the lives of French citizens and their security," a statement read.
"It is also an attack on freedom of speech and the press, core elements of our free democratic culture. In no way can this be justified."
Pope Francis has also condemned the shooting. The Vatican said it was "a double act of violence, abominable because it is both an attack against people as well as against freedom of the press".
In a statement, the French journalists' union Syndicat National des Journalistes (SNJ) said the attack represented attempts to "silence" the entire profession.
"The massacre perpetrated against the editorial staff of Charlie Hebdo is a horror that strikes at us all. When journalists are killed, it is done to make an entire profession feel fear; it is done to silence. Attacking a newspaper is an attempt to muzzle the freedom of expression that exists in a democracy."
A Twitter campaign under the banner #JeSuisCharlie has quickly gained momentum as thousands pledge support for the magazine and to the victims of the attack.