YENAGOA, Nigeria (Reuters) - Armed men kidnapped three Chinese nationals and killed two local staff working on a power project in Nigeria's central state of Niger, police said on Thursday.

       The gunmen - thought to be members of gangs who have spread havoc and carried out mass kidnappings - struck on Tuesday, attacking staff from the Sino-Hydro Power Dam who were working on a transmission line tower in a village, police said.

       After a gun fight with police, three Chinese nationals were kidnapped and another four of their compatriots were rescued, Niger police spokesman Wasiu Abiodun said.

       A Chinese worker and two local staff were hit by bullets and the Nigerians later died in hospital, Abiodun added.

       "In the process of scampering for safety during the gun duel, three among the expatriates were abducted," he said.

       Joint police and military teams had launched a manhunt for the missing workers, he added.

       Known locally as bandits, the gangs have been involved in abducting school children and ordinary citizens mostly in the north and northwest, adding to growing insecurity in a country battling an Islamist insurgency.

       Bandits usually carry out kidnappings for ransom and retreat to forests.

       The government on Wednesday listed two bandit gangs as terrorist groups, allowing security forces to use deadly force without being liable to judicial scrutiny.

       The army said on Thursday two bandit leaders were killed earlier this week following military air strikes in Zamfara state, where authorities imposed a telecoms blockade in September to try to contain bandit operations.

       (Additional reporting by Camillus Eboh in Abuja, writing by MacDonald Dzirutwe, editing by Andrew Heavens)