French police yesterday blew up a suspect package in a city square in Toulouse, where a radical Islamist killer of seven died in a police shootout the day before.

Police had evacuated the square in front of the Capitole de Toulouse, the centre of the municipal administration, amid a “scarlet” terrorism alert in the region following Mohammed Merah’s killing spree and death.

Merah, 23, murdered three Jewish children, a trainee rabbi and three soldiers. He claimed to be an Al-Qaeda member who killed to avenge Palestinian children and punish France for sending troops to Afghanistan.

Meanwhile, however, French authorities yesterday rejected charges that intelligence failures allowed a young man to kill seven people, insisting there was no evidence he was anything but a lone wolf with no ties to Al-Qaeda.

Prime Minister Francois Fillon said security officials had known Mohamed Merah, who died in a hail of police bullets, was a radical Islamist who visited Afghanistan, but said there was no reason to suspect he was planning attacks.

The intelligence services “did their job perfectly well. They identified Mohamed Merah when he made his trips,” he told French radio.

Intelligence agents “watched 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,” said Mr Fillon.

The head of France’s DCRI domestic intelligence agency, Bernard Squarcini, said there was little more that security services could have done to predict or prevent the atrocities by Merah, who died after a 32-hour police siege in Toulouse.

Merah, who claimed to be an Al-Qaeda member who killed to avenge Palestinian children and punish France for sending troops to Afghanistan, did not follow the usual path taken by Islamist extremists, Mr Squarcini told Le Monde daily.

“According to statements he made during the siege, he self-radicalised in prison, on his own, reading the Koran,” he said. “He said, in any case, everything is in the Koran. So, he was not a member of a network.”

Merah said that when he travelled to Pakistan in 2011 he did not frequent the usual training centres – where spies might have reported his presence – but instead was trained by a single individual, the DRCI chief said.

After a 2010 trip to Afghanistan, French agents investigated Merah but found none of the usual danger signs associated with organised extremism, said Squarcini. “No ideological activism, no visiting mosques,” he said.

Merah, 23 when he died, was jailed in France at 19 for two years for a series of thefts and violent crimes.

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