MOGADISHU: Somali witnesses said Sunday that at least eight civilians were killed in the disastrous French operation to rescue a kidnapped secret agent but France's defence minister defended the decision to launch the raid.

Sources in lawless Somalia also suggested the reason Saturday's raid failed was that the Al Qaeda-linked Shebab group holding the hostage received advance warning.

"Four civilians, including three from one family, are among the dead. They were all killed outside Bulomarer, where the French commandos landed before entering the city," resident Adan Derow said by telephone.

The victims were a couple, their son and another man, other residents said.

"We don't know why those civilians were killed" outside Bulomarer, where the raid took place, added another resident, Ali Moalim Hassan.

"Four other civilians were also caught in the crossfire and died in the town of Bulomarer" during a pitched battle between French commandos and Islamist fighters.

The four included a woman, her child and a local market guard, according to residents.

On Saturday, French Defence Minister Jean-Yves Le Drian said that one French soldier died and another went missing during the raid, adding that 17 guerrillas were killed.

He said "all indications" point to the conclusion that the hostage, a French intelligence agent with the alias of Denis Allex, had been killed by his captors.

But the Shebab denied that Allex was dead and warned they would decide on his fate within two days. They also claimed they had captured a wounded member of the French commando.

Le Drian said Sunday that French troops underestimated the Islamist rebels' strength when they launched the overnight operation, which involved some 50 troops and at least five helicopters.

Derow meanwhile told AFP that "people saw (the French commandos) disembark in the fields. The Shebab were alerted that the helicopters had landed and that they let out soldiers, and so they (the Islamists) were able to prepare".

Senior Shebab commander Sheikh Mohamed Ibrahim confirmed to AFP by telephone that the "fighters were already aware of the attack and we were ready to defend ourselves, thank God". He didn't specify how they were alerted.

Faced with questions at home over the failure of the operation -- the latest in a string of unsuccessful hostage rescues in Africa -- Le Drian on Sunday defended the decision to send in the elite troops.

"It's good to talk, to look for a deal, but we cannot bow to unreasonable conditions, as was the case with the Shebab," the minister told French radio Europe 1.

"The Shebab were asking for the release of I don't know how many jihadist prisoners around the world. It was strictly impossible and completely unrealistic," he said.

Several residents expressed their anger over the raid.

"They killed innocent civilians and left without accomplishing anything. The people here are very disappointed in the French government on account of the civilian victims," said Bulomarer resident Moalim Ahmed Nur.

"These people were crazy," said another Somalian regarding the French commandos, an employee of a local humanitarian agency who wished to remain anonymous.

"We were told there were about 40 of them against more than 100 heavily armed Shebab fighters. Their mission was impossible and not very professional."

France has a recent history of botched operations, including a failed joint raid with Niger forces in 2011 that left both hostages dead and another in Mali that led to the hostage's execution.

In 2009, French commandos launched a raid to free a French family whose yacht had been hijacked by Somali pirates in the Indian Ocean. They retook the boat but accidentally shot the father dead.