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Islamic State hold 20 hostages in Sydney Cafe at Gun Point

Police have confirmed a terrorist has taken hostages in a Sydney Cade and forced them to hold Islamic State Flags against the windows.

Police have shut off airspace within Sydney and the area which is home to media and banking HQs is currently being cleared by officers.

Australian Police have cordoned off Martin Place which is one of the main business areas.

Armed officers are at the scene with advice from New South Wales Police to avoid the area.

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