Rioters exchanged gunfire with police in the French city of Grenoble and set fire to shops and cars after police shot dead a man accused of robbing a casino.

Youths torched between 50 and 60 cars in the southeastern French city, as well as construction equipment and two shops, while police arrested a 17-year-old and an 18-year-old.

The rioting started after a memorial service for 27-year-old Karim Boudouda, who died 24 hours earlier in a shootout with police after allegedly holding up a casino near Grenoble.

Shortly before midnight, a group of around 30 youths armed with baseball bats and iron bars attacked a tram in Boudouda's working class district of La Villeneuve and forced the passengers to get out.

Police intervened to protect the passengers, and the youths began torching vehicles and attacking police who responded with tear gas.

A couple of hours later a youth emerged at the front of the rioters and fired a shot at police, who returned fire four times, police spokeswoman Brigette Jullien tolsaid.

Nobody was injured in the riots, police said.

Order was restored this morning in La Villeneuve, and police could no longer be seen on the neighbourhood's streets.

According to police union SGP-FO, violence has been on the rise in recent months in Grenoble.

‘Police are at breaking point,’ said regional union chief Daniel Chomette, who called for reinforcements.

The casino at Uriage-les-Bains was the third to be attacked in southeastern France and Switzerland since late March.

An alleged accomplice of Mr Boudouda escaped during the shootout and is still on the run. Police found between €20,000 and €40,000 in the back of the getaway car.