This study contributes to our understanding of the damage evolution and fracture behaviour of two-phase materials that combine brittle particles with a ductile matrix. We focus on model composites roughly half-ceramic/half-metal that are produced in-house by infiltrating ceramic powder beds with liquid pure aluminium or aluminium alloy. Like many other materials, these composites exhibit two modes of tensile failure; they fail either by tensile instability, or alternatively they break prematurely, in a brittle fashion. A micromechanical model is established that links damage build-up and composite fracture. This analytical model predicts the tensile curve and the strength of particulate composites that undergo damage in the form of statistical particle fracture. Similarly to models for continuous-fibre reinforced composites, two extreme modes of load sharing (a fully local and a global load sharing mode) are accounted for, which yield a lower and an upper bound for the failure stress. Under local load sharing, the model predicts either of two different failure modes, i.e. brittle failure or failure by the onset of tensile instability, whereas global load sharing induces the latter failure mode only. We show that this model captures the transition from failure by tensile instability to brittle failure that occurs with an increase of matrix strength or with a decrease of particle strength. The local load redistribution upon particle fracture and avalanche-like growth of damage can thus explain the premature brittle failure that is observed in some composites. The direct assessment of the particle strength properties not being possible, these are "back-calculated" using the aforementioned model and tensile tests (with periodic unload-reload cycles to monitor the evolution of Young's modulus) conducted on composites made with different matrices. Using these particle properties, we show in particular that composite strength predicted under the assumption of local load sharing is in good agreement with experiment, and that fracture of particles embedded in a soft matrix is not only governed by the average particle stress, but also by the composite plastic strain. Moreover, tests of axisymmetric notched specimens indicate that damage possibly also depends on stress triaxiality.