Somali militants say French intelligence officer Denis Allex has been executed. In a Tweet, Al Shabbab said Allex had been killed on Wednesday.
A French rescue bid failed last week. French officials said Allex had died in the rescue effort but the rebel group claimed he had survived.
France struck against Islamist miliants in Somalia today in a failed bid to rescue a hostage who's believed to have died, along with at least one French soldier.
It comes the same day as the British Government announced it was sending two RAF C-17 planes to support the French military operation against Islamists in the West African Republic of Mali.
ITV News Reporter Sejal Karia has the latest in this report:
France said today that it believes intelligence officer Denis Allex was killed during "intense combat".
– France's Defence Minister Jean-Yves Le Drian
Commandos broke into where Allex was being detained last night and immediately faced strong resistance. Intense combat took place, during which - and now I speak with caution - everything leads us to believe that Denis Allex was unfortunately killed by his captors.
However, a spokesman for al Shabaab claimed the spy is still alive in a statement.
– Al Shabaab spokesman
The injured French soldier is now in the custody of the mujahideen and Allex still remains safe and far from the location of the battle.
France sent commandos into Somalia to rescue a secret agent who had been held by insurgents since 2009, but said it believed he had been killed by his captors along with a French soldier during the raid.
The intelligence agency's team flew into southern Somalia by helicopter under the cover of darkness to try to free Denis Allex from the al Qaeda-linked al Shabaab, on the same day France launched air strikes against Islamist militants in Mali.
Defence Minister Jean-Yves Le Drian said the operations were not connected, but France has been concerned that other hostages held in Africa would be at risk if they intervened against the al Qaeda-allied fighters on the other side of the continent.
A French soldier has been killed and another is missing in a failed hostage rescue attempt in Somalia, the French government said.
The French national, who was being held in a base belonging to al Shabaab insurgents in a southern Somalian village, also died.
The raid also ended in the deaths of 17 militants.
The rescue attempt was not linked to the Mali intervention, according to Jean-Yves Le Drian, France's defence minister.
An al Shabaab official, who asked not to be named, told the news agency Reuters they had exchanged fire with French commandos.
– Ahmed Omar Mohamed, deputy chairman for lower Shabelle region
Helicopters attacked al Shabaab at 2.00 am this morning. Two civilians died in the cross fire.