Updated 3.45pm

A suspect in a knife attack in France died from injuries sustained in a shootout with police on Friday, sources close to the case said, hours after he badly wounded a female officer in the latest violence directed at police over recent months.

The suspect, still armed, had been on the run after the attack in La Chapelle-sur-Erdre near the city of Nantes, and 80 officers were dispatched to pursue him.

After stabbing the officer at a police station, he stole her service weapon. A source close to the investigation said her injuries were life-threatening.

No motive for the stabbing has emerged, but the attacker was "radicalised and suffering from a very serious psychiatric illness", one source involved in the investigation said.

Two French gendarmes were wounded during the exchange of fire that resulted in the arrest of the suspect, authorities said, and one was suffering from shock.

The suspect died shortly after.

An AFP photo reporter at the scene said he heard around a dozen rounds discharged in two rapid bursts during the standoff that took place in a residential area.

Special police forces carrying shields and wearing helmets used rubbish bins and bushes for cover as they opened fire.

One witness told AFP he saw a civilian on the ground surrounded by police after the shootout.

"The gendarmes have neutralised the individual suspected of the knife attack against the municipal police officer," Interior Minister Gerald Darmanin tweeted.

Pupils in the area's primary and middle schools were kept indoors while police tracked the suspect, a city official told AFP.

"We drew the curtains and told the children to lie on the ground. They've been there for two hours," one local teacher told AFP by text message during the manhunt.

La Chapelle-sur-Erdre is a town of 20,000 inhabitants just north of Nantes near the  Atlantic coast. 

The attack came on the same day that Justice Minister Eric Dupond-Moretti called on French judges to show "firmness" when dealing with people found guilty of attacks on police forces.

Spate of attacks

French police officers have demanded better protection and harsher punishment for attacks against them after a spate of assaults in the last months which shocked the country.

Earlier this month, officer Eric Masson was shot dead while investigating activity at a known drug-dealing site in the southern city of Avignon.

Masson's death came after the April 23 killing of Stephanie Monferme, a police employee who was stabbed in the town of Rambouillet outside Paris.

There was no immediate indication that the French authorities intended to open a terror probe into Friday's attack. Nantes prosecutors said they could not immediately comment.

Several attacks over the last year have reignited concerns about the spread of radical Islam inside France and immigration.

In September, a Pakistani man wounded two people with a meat cleaver outside the former offices of satirical magazine Charlie Hebdo which had printed cartoons of the Prophet Mohammed.

On October 16, a young Chechen refugee beheaded teacher Samuel Paty who had showed some of the caricatures to his pupils.

And on October 29, three people were killed when a recently arrived Tunisian went on a stabbing spree in a church in the Mediterranean city of Nice.

In the most severe recent attack against French police, three officers and one police employee were stabbed to death in October 2019 by a IT specialist colleague who was himself then shot dead.

He was later found to have shown an interest in radical Islam. 

These attacks came after the massacres carried out by Islamist extremists from 2015 that began with the murder of staff in the offices of Charlie Hebdo in January that year.

In France's deadliest peacetime atrocity, 130 people were killed and 350 were wounded when Islamist suicide bombers and gunmen attacked the Stade de France stadium, bars and restaurants in central Paris and the Bataclan concert hall in November 2015.

And in 2016 a man rammed a truck into a Bastille Day crowd in Nice, killing 86 people.

Just a few weeks before, two police officers were stabbed to death at their home outside Paris by a man claiming allegiance to the Islamic State group.