Al-Qaeda in North Africa has demanded that France overturns its burka ban in return for the release of five French hostages kidnapped in the African state of Niger.
The group is also demanding 7 million euros (£6.1 million) and the release of Islamic militants being held in France as part of their conditions.
Seven captives - five French citizens and two Africans - were abducted in Niger a month ago before being taken to neighbouring Mali.
The kidnappings marked an escalation of tensions between Paris and al-Qaeda's north African network, known as al-Qaeda in the Islamic Maghreb (AQIM), which executed 78-year-old French hostage Michel Germaneau in July.
But a French intelligence source yesterday described the terms for the hostages release as "unrealistic".
France's burka ban crossed its final legal hurdle last week, making it illegal for anyone to hide their faces in public. It will come into force early next year, and means women will then face jail for wearing the full Islamic face veil.
The law was passed despite separate threats from al-Qaeda chiefs to seek "dreadful revenge" if it is ever enforced.
The French spy source told news agency AFP that initial contacts with AQIM through local chiefs in Mali were "not encouraging" due to the nature of the demands.
The source added: "The abductors have unrealistic demands which Mali and France cannot accept, including withdrawing a ban on the face veil in France and the release of some of the group's elements detained in France, Mauritania and other countries."
France's new law was passed after a year of national debate on burkas and niqabs, and mounting public tensions over the issue.
There is also widespread support for a similar ban in the Netherlands, while Switzerland recently voted to ban the construction of new minarets on mosques.
The French burka ban also comes amid warnings of a heightened terrorist threat across Europe.