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Police in New Zealand are hunting for a man who shot two people dead and injured a third at an unemployment office, the BBC reported.

The incident happened on Monday morning in the town of Ashburton, southwest of Christchurch.

The man went into a Work and Income New Zealand office and opened fire, before fleeing.

Two people were killed and a third person was in a "serious but stable condition,” local police said.

"This is an ongoing situation and a full police response has been deployed," the statement from Canterbury Police District said.

"Residents in the Ashburton area are asked to stay inside at this time."

"The male left the scene on a push bike and should not be approached."

Ashburton is a small town of less than 20,000 people, about 85km (55 miles) from Christchurch.

Police urged the suspect, who they named as John Henry Tully, 48, to turn himself in.

"We believe he is somewhere in the greater Ashburton area - we would like him to come forward and liaise with my team," said Superintendent Gary Knowles.