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Amateur video posted on YouTube is said to show the scene immediately after the shooting
Witnesses said a man wearing a gas mask opened fire after tossing a tear gas canister in the auditorium as movie-goers watched The Dark Knight Rises.
A 24-year-old local man was arrested in a car park nearby in possession of a rifle, handgun and knife.
Another gun was recovered from the theatre, in the city of Aurora.
Police revised down the death toll from 14 earlier. They said about 50 people had been shot, including the deceased.
FBI sources named the gunman as Aurora resident James Holmes, a white American. They said no terrorism link had been established.
Child casualties
US President Barack Obama has spoken of his shock at the incident, which began at about 00:30 local time (06:30 GMT) at the Century 16 cinema multiplex.
The suspect told police explosives were at his home.Police chief Dan Oates told reporters that an apartment block in the north of Aurora had been evacuated as they investigated that information.
He said the shooting was "a horrific event".
"The shooting apparently went on for some time," he added.
Witnesses said the gunman opened fire during an action scene in the summer blockbuster. There were scenes of chaos as movie-goers, some dressed in costume as heroes and villains, scrambled for the exits.
Ten people were killed at the cinema and two others died later in hospital of their wounds.
Many ambulances attended the scene.
About 50 people were taken to four hospitals, some suffering from the effects of chemical exposure from the canister thrown by gunman.
The casualties included a four-month-old baby, who was released from hospital after treatment, and a six-year-old child.
One witness said a man in a bullet-proof vest and riot helmet had been "slowly making his way up the stairs and just firing - picking random people".
Panic
Another witness, Chayyiel Jackson, told the BBC: "During the first action scene in the movie, on the right side a dude came in all blacked out, with a black mask. At first we thought it was part of the movie event.
"He threw tear gas across the crowd and after that people started to panic. He pulled out a rifle and started shooting.
"I was wondering if this was real life or a dream."
It is reported that some of the shots fired went through the wall and may have hit people in an adjacent auditorium.
Another eyewitness, identified only as Pam, told the BBC: "He fired a canister into the air. It shot it right into the air, then I started to hear the bang, bang, bang of a gun.
"I crawled my way through the row. Luckily the exit was close to where I was sitting so I got out pretty fast. I heard more shots as I left."
Another eyewitness, Salina Jordan, 19, told the Denver Post she had seen one girl shot in the cheek, and a girl who appeared to be about nine years old with a gunshot wound to the stomach.
A witness in the next-door theatre told 9News he initially thought live special effects had been laid on by the cinema after hearing loud bangs and seeing smoke.
President Obama said in a statement that he and First Lady Michelle Obama were "shocked and saddened by the horrific and tragic shooting".
He added: "As we do when confronted by moments of darkness and challenge, we must now come together as one American family."
Plans for Friday night's red carpet premiere of the film on the Champs-Elysees in Paris have been cancelled, while media interviews with its stars have been called off.

Article from: http://www.bbc.co.uk/news/world-us-canada-18921492