WASSERBILLIG, Luxembourg (AP) _ A man holding 29 children and three teachers in a preschool has demanded a minibus to take him and the hostages to Luxembourg airport, where he wants a plane to fly him to Libya, a regional police chief said Thursday.

Chief Joseph Schmit said the hostage taker had given no indication what he would do if his demand was not met. Schmit did not say how the police planned to respond.

Police said authorities strengthened security operations around the school. The hostage taker's 8:30 a.m. (2:30 a.m. EDT) deadline for a minibus passed without incident, although the man was seen waving a gun and grenade from a window.

We are still in regular contact with the hostage taker by phone,'' Schmit told a news conference. ``As far as we can tell the situation is calm, but there is a certain fatigue... The climate is becoming more tense.''

The 40-year-old man, armed with a grenade, pistol and knife, took 37 children, none older than 7, hostage Wednesday in Wasserbillig, near the border with Germany.

Negotiators eventually persuaded him to release eight of the children, said Victor Schlentz of the Luxembourg police.

As the standoff entered its second day Thursday, more than 130 police had taken positions around the school, and a dozen German police were ready to help nearby.

``The situation is stable; we are still in contact with the hostage taker,'' Schmit said early Thursday. ``We are quite confident that the situation will not escalate.''

The incident has shocked this normally quiet corner of Europe, where violent crimes are rare. Anxious onlookers gathered near the barricades around the building, which was surrounded by ambulances, fire trucks and a growing number of media trucks.

Police have refused to give any details on the hostages' condition, police tactics or on the kidnapper's motive.

But local residents said the man, a resident of a neighboring village, apparently blamed the school when he lost custody of his two children in a separation battle with his wife. His children had at one time attended the preschool.

Meanwhile, the father of two of the child hostages indicated that they weren't being harmed.

``They told us the kids were sleeping and that they had been fed,'' said Seraphine Freitas, 40.

He said he and his wife were extremely worried. ``We have to get through this.''

The eight released children were returned to their parents ``in good condition,'' Schlentz said.

As the incident began, a teacher managed to smuggle six or seven other children out of the school, police said.

In a statement, Luxembourg's Interior Minister Michel Wolter said he would like to see a peaceful resolution.

``He wants to have a plane to leave for Libya. I have given instructions to use all means necessary to resolve this matter without the use of violence,'' said Wolter.

Wolter said that the man has had family problems and had a history of mental illness. Police said he spoke with a psychiatrist on the scene. Police also said that the hostage-taker is a Luxembourg citizen but a native of Tunisia.

Luxembourg, wedged between Belgium, Germany and France, is one of Europe's smallest countries. Wasserbillig, with a population of 2,300, is located on the Mosselle River, on the German border in eastern Luxembourg.