At least one French soldier has been killed in Somalia during a failed bid to free a French hostage, who is also believed to have died, the French defence minister has said.

The operation to free the secret agent, with the alias of Denis Allex, was launched by France's elite DGSE secret service, Jean-Yves Le Drian said in a statement on Saturday, adding that another French soldier was missing.

"All indications are (that Allex was) killed by his captors," Le Drian said.

He had earlier spoken of two dead troops.

Francois Hollande, the French president, has expressed his condolences to the dead soldier's family.

"This operation confirms France's determination not to give in to the blackmail of terrorists," he said.

But the al-Qaeda-linked al-Shebab armed group denied Le Drian's assertion that they had killed the hostage, adding that they would decide his fate in two days.

The al-Shabab statement said "the helicopters attacked a house ... upon the assumption that Denis Allex was being held at that location, but owing to a fatal intelligence blunder, the rescue mission turned disastrously wrong".

Al Jazeera's exlusive interview with a spokesman for Al Shabab

"The injured French soldier is now in the custody of the mujahedeen and Allex still remains safe and far from the location of the battle," it said.

"Several French soldiers were killed in the battle and many more were injured before they fled from the scene of battle,

leaving behind some military paraphernalia and even one of their comrades on the ground."

A spokesman for Al Shabab told Al Jazeera in an exclusive interview that French troops attacked a house in Bulomarer, but it was Al Shabab fighters who pushed them back.

"When the [French] soldiers could not get anywhere, they used helicopters to bomb indiscriminately," said Ali Mahmoud Rage, who added the French were unable to successfully achieve their mission.

"[The French] also killed more than 10 civilians, including women, men, and the elderly," he said."They also failed to capture the French soldier, and he is still in our custody."

Allex is among nine French hostages in Africa of whom at least six are held by al-Qaeda in the Islamic Maghreb (AQIM).

'Intransigence of the terrorists'

The French defence minister said the raid in Bulo Marer, about 110km south of the Somali capital Mogadishu, was sparked by the "intransigence of the terrorists who have refused to negotiate for three and a half years and were holding Denis Allex in inhuman conditions".

A Somali government official in Bulo Marer confirmed the raid in which about 17 Somali fighters have also reportedly been killed.

"Helicopters attacked al-Shabaab at 2.00am local time this morning. Two civilians died in the crossfire," Ahmed Omar Mohamed, deputy chairman for lower Shabelle region, told Reuters news agency.

Allex was one of two French intelligence officers who were kidnapped by al-Shabab in Mogadishu in July 2009 but his colleague, Marc Aubriere, escaped a month later.

He last appeared in a video in October last year looking gaunt and calling on the French president to work for his release.

The al-Shabab lost their main strongholds in the south and centre of the country following an offensive launched last year by an African Union force, but they still control some rural areas.

Somalia has not had an effective central government since 1991. However, a new administration took office last year, ending eight years of transitional rule by a corruption-riddled government.