Twelve people, including a number of hostages, have been killed in an attack on two banks in Brazil, an official has said.

Lielson Landin, mayor of the northeast city of Milagres, said six robbers had attacked the banks just after 2.00am on Friday.

What happened next is unclear but local reports said the robbers escaped without any money before hijacking a car on a nearby highway.

In the car was a local businessman and his family, including two children, who are believed to have been five of the hostages killed.

Details on the sixth hostage are unclear but it was thought that he had also been near the road.

The robbers reportedly killed the hostages when police approached.

After a shoot-out lasting about 20 minutes, the robbers were also killed, according to Mr Landin, who said that "the criminals killed the hostages and the police killed the criminals".

An unidentified resident told R7: "I could not sleep with the noise of the shots and I also could not leave the house to know what was happening.

"It was total panic."

The head of the Secretariat of Public Security and Social Defense Andre Costa told Diario de Nordeste that two people had been arrested.

He added: "We still do not know what happened.

"There was an exchange of shots.

"The preliminary information we received is that one of the criminals arrested ended up saying that he killed people who were in the place and were not of the gang."

He also said that it was too early to blame police for the deaths of the hostages, the newspaper reported.

Milagres is in the state of Ceara, which is one of Brazil's most violent.