MANILA - Philippine security forces stormed a bus packed with Hong Kong tourists on Monday to end a dramatic hostage crisis that unfolded live on global television, leaving eight people and the gunman dead.

The day-long ordeal began when a disgruntled ex-policeman armed with an M-16 assault rifle and dressed in combat pants hijacked the bus in Manila's tourist district in a desperate bid to get his job back.

Negotiations broke down after nightfall when the gunman, former senior police inspector Rolando Mendoza, began shooting and commandos were forced to storm the bus, firing dozens of bullets of their own into the vehicle.

"I shot two Chinese. I will finish them all if they do not stop," Mendoza told a local radio station as the police assault was about to get under way.

Police said a sniper shot Mendoza dead after he used his captives as "human shields" in the final moments of the 12-hour standoff.

Philippine President Benigno Aquino said eight tourists were confirmed killed, while the Red Cross reported another seven were in hospital with unspecified injuries.

Seven tourists, including children, and two Filipinos were freed at various times throughout the day from the bus that was parked at Rizal Park, a popular tourist destination just a few blocks from police headquarters.

The Filipino bus driver jumped out of a window and escaped moments before police stormed the vehicle, with his escape and the rest of the crisis broadcast live on television.