Police could not be reached immediately for confirmation. (Representational)

At least two people were shot dead on a street in the German city of Halle on Wednesday, police said, with media and witnesses reporting that a synagogue and a Turkish restaurant were the targets.

"Early indications show that two people were killed in Halle. Several shots were fired," said police on Twitter, urging residents in the area to stay indoors.

Police had earlier said the "perpetrators fled in a car" before saying later that one suspect had been caught.

It was not immediately clear whether there were other assailants.

The central train station has been closed while the area is under lockdown, rail company Deutsche Bahn said.

According to Bild daily, the shooting took place in front of a synagogue in the Paulus district, and a hand grenade was also flung into a Jewish cemetery. Police could not be reached immediately for confirmation.

Jews around the world were marking Yom Kippur, one of the holiest days in the Jewish calendar, on Wednesday.

An eyewitness, Konrad Roesler, told news channel NTV he was in a Turkish restaurant about 600 metres (yards) away from the synagogue when "a man wearing a helmet and military uniform" flung a hand grenade at the store.

"The grenade hit the door and exploded," he said.

"(The attacker) shot at least once in the shop, the man behind me must be dead. I hid in the toilet and locked the door."

Speaking to NTV, a police spokesman said the motive of the suspect or suspects was not clear.

"We don't have any indication about the motive of this act."

'Big threat'

Wednesday's shootings came three months after the shocking assassination-style murder of local pro-migrant politician Walter Luebcke in the western city of Kassel, allegedly by a known neo-Nazi.

Luebcke's killing has deeply shaken Germany, raising questions about whether it has failed to take seriously a rising threat from right-wing extremists.

Investigators have been probing the extent of suspect Stephan Ernst's neo-Nazi ties and whether he had links to the far-right militant cell National Socialist Underground (NSU).

Interior Minister Horst Seehofer last month warned of the rising danger of the militant far right, calling it "as big a threat as radical Islamism".

Seehofer said that police had uncovered 1,091 weapons including firearms and explosives during probes of crimes linked to the far right last year, far more than in 2017 when 676 were found.

At the same time, Germany has also been on high alert following several jihadist attacks in recent years claimed by the Islamic State group.