A man deliberately drove his car into a group of people outside a school near Toulouse in southern France on Friday, injuring three Chinese students, police sources said.

The driver of the vehicle, a 28-year-old man, was known to police for committing minor offences but was not on a terrorism watchlist, the sources said. He was arrested at the scene.

One of the students, a young woman, was being treated for serious head injuries.

"For the moment, it is not being looked at as a terrorist incident although it is also not ruled out," the Toulouse prosecutor said in a statement.

The driver has long suffered from psychological problems and was hospitalized until December 2016, the prosecutor said.

France-vehicle

Authorities are investigating the motive in the deliberate attack in Toulouse on Friday. (Google)

More than 240 people have been killed in France since early 2015 in attacks by Islamist militants or assailants inspired by the Islamic State group.

Monday will mark the second anniversary of attacks in Paris that killed more than 130 people. Earlier this week, French police arrested nine people and another was arrested in Switzerland in co-ordinated counterterrorism swoops.