August, 26 2009, 4:56 AM-ET,(SOMINA)—— One of two French intelligence agents kidnapped by hardline Islamist rebels in Mogadishu last month is free, Somali and French authorities said on Wednesday.

Officials from a hardline group involved in the kidnapping said the hostage had been released in exchange for a ransom, but France said the agent had escaped and that no ransom had been paid.

Somalia's Information Minister Dahir Mohamud Gele initially announced in a press conference in Mogadishu that both agents had been freed, but within minutes told AFP that only one was free.

"My words are that one of two hostages kidnapped in Mogadishu last month is now in the hands of the government. He is safe and in good health," he said.

The government was continuing its "efforts to release the second hostage."

He refused to elaborate on the circumstances, saying more details would be made available later.

The French agents were on a mission to train Somali forces when they were snatched by gunmen from their hotel in the war-riven Somali capital on July 14. They were quickly separated, held by two hardline groups involved in a military offensive against the government.

One was believed to be held by the Shebab, an Al Qaeda-inspired group, the other by Hezb al-Islam, a more political movement led by Sheikh Hassan Dahir Aweys, a former ally of President Sharif Sheikh Ahmed.

"The hostage held by Hezb al-Islam was able to escape his kidnappers. Despite certain allegations and rumours this happened without violence and France did not pay a ransom," foreign ministry spokesman Eric Chevallier told reporters in Paris.

Chevallier also confirmed that the second hostage was "still being held".

But officials from Hezb al-Islam and the transitional federal government speaking on condition of anonymity said the first hostage reported free had been released in exchange for a ransom.

"Some government forces had been waiting for the release in the Gubta neighbourhood (in southern Mogadishu). He was handed over at around 4:00 am (0100 GMT) this morning," a senior Hezb al-Islam official told AFP.

"The French agent did not escape by himself. Some negotiations had been going on for a while between the government and Hezb al-Islam officials," a government official also said.

"The initial ransom demanded was five million dollars but the amount has decreased," the official explained.

He said that when talks stumbled, some Hezb al-Islam militants struck their own deal and organised the release without their leadership's authority.

Sources in the presidential palace told AFP that a second European-looking individual had been seen Wednesday on the compound but no more information on the fate of the second hostage was immediately available.

The Shebab had said after the kidnapping -- one of the most high-profile abductions to have taken place in Somalia in recent years -- that the pair would face a Sharia court for "spying and entering Somalia to assist the enemy of Allah."

Mogadishu is one of the world's most dangerous places, devastated by fighting between rival factions. Westerners have been systematically targeted in recent months.

If a deal was indeed struck, neither side was likely to advertise it.

Paying a ransom to extremist Islamic organisations with suspected links to Al Qaeda would be against French policy while the kidnappers themselves might not want to be seen as putting enrichment before jihad.

Armed Somali gangs have carried out scores of kidnappings in recent months, often targeting foreigners or Somalis working with international organisations to demand ransoms.

Three aid workers were kidnapped in northern Kenya in late July, while two journalists -- a Canadian woman and an Australian man -- have been held hostage for a year.

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