Spanish police arrested a group of suspected cocaine traffickers on a boat from South America in the middle of the Atlantic after one of them shot dead a fellow smuggler and took the rest hostage, the interior ministry said on Wednesday.

The case occurred in November but was kept under judicial secrecy until an investigation was completed, it said.

In an apparent falling-out among the boat's crew, a Serbian national seized control of the vessel Sea Paradise, shot one of the other smugglers, threw his body overboard and took the eight other crew members hostage, a ministry statement said.

Tipped off about a shipment of some 2.3 tonnes of cocaine from Latin America to be transferred to a smaller boat near the Canary Islands, Spanish police launched an operation to seize the drug during which they discovered the hostage situation.

A police team reached the Sea Paradise at an undisclosed location in the Atlantic and negotiated for hours with the hostage taker, who ended up surrendering his weapon and freeing the crew, "who feared for their lives", the statement said.

All those on board were then taken into custody and the cocaine haul seized from a hidden compartment onboard. (Reporting by Emma Pinedo; editing by Andrei Khalip and Mark Heinrich)