French authorities on Friday sought to defend their actions amid mounting questions after a gunman known to the intelligence services was able to murder seven people.

Mohammed Merah, 24, was shot dead by French police in a shootout in Toulouse on Thursday, following a 32-hour standoff.

As the standoff progressed, French Interior Minister Claude Gueant admitted Merah was on an intelligence service watch list of Islamic extremists.

"We knew, and that is why he was under surveillance, that he had travelled to Afghanistan and Pakistan," Gueant said during the siege.

The minister added that while Merah had a criminal record, nothing in his history suggested he was likely to commit acts of violence.

Merah, a French citizen of Algerian descent, travelled to Afghanistan and Pakistan in 2009 where he is believed to have attended terrorist training camps.

He returned to France, probably in 2010, and was questioned by French authorities as recently as November last year.

According to French media sources, the authorities accepted Merah´s explanation that he had travelled to Afghanistan as a tourist.

However, criticism of French authorities has been buttressed by the revelation that Merah was also on an American no-fly list because the FBI regarded him as a "possible risk."

US officials say French security officials would have been aware of Merah´s inclusion on the list.

The revelation has top French politicians trying to explain what went wrong as France examines whether Merah could have been stopped before he murdered three Jewish schoolchildren, a rabbi and three French soldiers in the past fortnight.

Prime Minister Francois Fillon said French police had no grounds to detain him before he carried out the killings and said authorities cannot "permanently monitor without judicial authorisation" someone who has not committed an offense."

Merah "was interrogated, surveilled and listened to," Fillon said, adding Merah appeared to live "a normal life".

Fillon defended the intelligence services, saying they "did their job perfectly well; they identified Mohamed Merah when he made his trips".

Intelligence agents "surveilled him long enough to come to the conclusion that there was no element, no indication, that this was a dangerous man who would one day pass from words to acts," Fillon said.

He also argued, "Belonging to a Salafist organization is not an offense in and of itself. We cannot mix up religious fundamentalism with terrorism, even if we know there are elements that unite them."

Earlier, French Foreign Minister Alain Juppé said an inquiry would have to be launched.

"I understand that one might wonder if there was a lapse or not. We need to bring clarity to this,” Juppé told French radio. (IsraelNationalNews © 2012 03/23/12)