A man of North African origin has allegedly stabbed two German tourists on the Spanish island of Majorca before being gunned down and restrained by police.

Witnesses told local media the man shouted in Arabic during the attack and threatened to replicate recent Islamist terror atrocities.

When he refused to cooperate, police shot the knife-wielding man in the ankle and arrested him before he allegedly shouted “You are racists!” to officers after the incident on Monday.

Última Hora, the biggest selling newspaper in the Balearic Islands, claims he told officers that if he had had a “Kalashnikov there would have been more death than in Paris or Barcelona”.

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A worker in the local in the area told the publication: “The first thing we think is that it was a terrorist attack.”

However, local police have also reportedly said there is not a terrorist element and are investigating if there was a drug-dealing link to the initial altercation.

The two German tourists were rushed to hospital after they were stabbed in the stomach and back in the early hours of Monday morning.

The victims, aged 27 and 46, were rushed to hospital with one admitted to an intensive care unit at the Son Llatzer Hospital where he had surgery. One has been discharged and the other remains in care.

Five officers were interviewing security guards who had witnessed the alleged stabbing when the suspect, who had previously fled, returned holding a blood-stained weapon.

They repeatedly shouted at him to surrender the blade before he reportedly lunged and was shot.

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Local police released photos of the knife and moments of the arrest on Facebook as well as an audio recording of the dramatic clash, which includes a gunshot.

“We stopped a 31-year-old male who allegedly stabbed two people on Palma’s beach last night,” they said in a statement.

“This incident and others like it are moments to remember and reflect on the courage of agents and to support those who endanger their lives to maintain everyone’s security.”

Posting the recording, they added: “Listen to the rapid response of local police, alerted to the presence of an individual with a tactical knife with which two people were allegedly stabbed.”