Police shot and killed a suspected panhandler Thursday who they say fired a semi-automatic weapon at officers near the heavily-trafficked Marriott Marquis Hotel in Times Square.

Sources say Bronx resident Raymond Martinez, 25, was peddling goods when he was approached by plainclothes police sergeant Christopher Newsom.

Newsom runs a task force that monitors aggressive panhandling and said he recognized Martinez and his brother from past interactions.

Police Commissioner Ray Kelly said that when Newsom asked the brothers for their tax stamps, Martinez ran away, and, when he was followed by Newsom, pulled out a weapon and pointed it at the sergeant.

The police commissioner said the suspect fired two rounds at the sergeant, and that one went through a window of the Broadway Baby Gift Store and another went through the hotel lobby's ceiling.

The sergeant fired four rounds in return, and Martinez was hit once in the chest and once in the arm by the hotel's entrance on 46th Street between Broadway and Eighth Avenue around 11 a.m.

Martinez was taken to Roosevelt Hospital and pronounced dead.

Witnesses described a chaotic scene.

"I heard gun shots, five gun shots, and I turn around and I saw somebody pointing with the gun to somebody else, street guys, and the guy just fell down," said a witness. "The other guy who was on top him, pointed the gun at him, and he didn't run or anything, they got the guy, and the other guy I think is dead because it was like five, six guns shooting."

"I was shocked. But not surprised. There are a lot of angry people and these are particularly hard times for many, many people," said another witness.

According to police, a MAC-10 semiautomatic handgun, pictured left, loaded with 27 rounds were found on Martinez. Another live round was also found. The police commissioner said it appears the gun jammed while the second round was fired.

"We're very lucky that those rounds were not fired," Kelly said.

The police commissioner said the gun had been reported stolen from Richmond, Va. on October 28, 2009. Kelly said that Martinez had a business card from a Virginia gun shop, with a message on the back reading, "I pity the cop who has the nerve to put me in his paddy wagon."

It was the first officer-involved shooting for the sergeant, a 17-year police veteran.

Martinez had five prior arrests, was wanted for an assault in the Bronx and had aggressively peddled DVDs, according to police.

Investigators are speaking to Martinez's brother in connection with the incident.