The Philippines-based Abu Sayyaf armed group has posted a video purportedly showing the beheading of a German man held for three months after demands for a ransom were not met.

The video, reposted on Monday by the monitoring group SITE, showed an elderly captive slumped on a grassy lot and a man holding a knife to his neck.

"Now, they'll kill me," the 70-year-old man said before he was executed on Sunday after a ransom demand deadline passed.

SITE identified the man as Jurgen Gustav Kantner, believed to be held by Abu Sayyaf in the jungles of southern Sulu province.

Following the release of the video, the Philippine government issued a statement condemning the "barbaric" killing of the German hostage.

"Up to the last moment, many sectors, including the armed forces of the Philippines exhausted all efforts to save his life," said Jesus Dureza, presidential peace adviser.

"We all tried our best. But to no avail."

Philippine officials have said the fighters were seeking a ransom of $605,000.

Beheading 'confirmed'

German government spokesman Steffen Seibert has confirmed that the German hostage was beheaded and condemned "the abhorrent act".



"After weeks of worry, we have today the sad certainty that a German hostage has been barbarically murdered by terrorist kidnappers in the Philippines," he said, adding that "in our deepest grief, our thoughts are with the relatives and friends of our countryman".



"(The killing) once again shows, how unscrupulous and inhumane the actions of these terrorists are. We must stand together and fight against them."

Earlier on Monday, the Philippine army said it was working with local authorities in looking for the captive's body.

Kantner was snatched on November 5 from his yacht off the southern Philippines. The armed group's fighters shot and killed his 59-year-old wife after she fought back and left her body in the boat.

Abu Sayyaf is a small, but highly active group known for beheading, kidnapping, bombing and extortion in the south of the country.

The group is believed to be holding a number of hostages and has freed several in return for ransom payments.

Abu Sayyaf, which is considered a "terrorist organisation" by several Western countries, emerged in the early 1990s as an offshoot of a separatist rebellion by minority Moro Muslims in the predominantly Roman Catholic nation's south.

Kidnap-for-ransom operations have long been a lucrative business in the region, but have escalated in recent years.

Abu Sayyaf is holding more than 20 foreign and local hostages in jungle encampments in the country's south. They beheaded two Canadian men last year after separate ransom deadlines lapsed.

Duterte has ordered troops to destroy the armed group, saying their ransom kidnappings were embarrassing and were creating a security alarm in the waters bordering the south, Malaysia and Indonesia.

The three countries have made efforts to jointly shore up security along their busy sea border but the kidnappings by the Abu Sayyaf and allied fighters of passing crews have persisted.