A woman, a 10-year-old boy and a local al Qaeda leader were among at least 11 people killed alongside two Western hostages when US-led forces fought Islamist militants in a failed rescue mission in Yemen

A woman, a 10-year-old boy and a local al Qaeda leader were among at least 11 people killed alongside two Western hostages when US-led forces fought Islamist militants in a failed rescue mission in Yemen, residents said on Sunday.

US Special Forces raided the village of Dafaar in Shabwa province, a militant stronghold in southern Yemen, shortly after midnight on Saturday, killing several members of al Qaeda in the Arabian Peninsula (AQAP).

American journalist Luke Somers, 33, and South African teacher Pierre Korkie, 56, were shot and killed by their captors during the raid intended to free them, US officials said.   

AQAP, formed in 2006 by the merger of the Yemeni and Saudi branches of the network, has for years been seen by Washington as one of the movement's most dangerous branches.

At least two more hostages are being held by the group.

"AQAP and Daesh (Islamic State) are essentially the same organisation but have different methods of execution and tactics," a senior Yemeni intelligence official said.