Two explosions in central Stockholm killed one person and injured two on Saturday in what Sweden's foreign minister called "a terrorist attack", causing panic among Christmas shoppers.

Police spokeswoman Petra Sjolander said a car exploded near Drottninggatan, a busy shopping street in the center of the city. Shortly afterward, a second explosion was heard higher up on the same street, and a man was found injured on the ground. He was later pronounced dead.

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Two other people were taken to the hospital with lighter injuries, but it was not immediately clear in which explosion they were hurt.

Rescue services spokesman Roger Sverndal said the car that exploded contained gas canisters.

Sjolander said it was unclear what caused the second explosion and if the two blasts were linked, but said a police bomb squad has been sent to the site.

"Most worrying attempt at terrorist attack in crowded part of central Stockholm. Failed - but could have been truly catastrophic," Foreign Minister Carl Bildt said in a message on Twitter, which was also shown on his blog.

'Man was lying on ground, bleeding'

Gabriel Gabiro, a former AP staffer, heard the explosion from inside a watch store across the street and saw smoke coming from the area where the man was lying.

"There was a man lying on the ground with blood coming out in the area of his belly, and with his personal belongings scattered around him," he said.

Gabiro said the blast was "quite loud" and he saw people running from the site.

"It shook the store that I was in," he said of the blast. "Then there was smoke and gun powder coming into the store. I saw some people crying, perhaps from the shock."

Swedish news agency TT said on Saturday that it and the Security Police had received an email about 10 minutes before the two explosions occurred.

The agency said the mail had sound files in both Swedish and Arabic attached.

It said the voice on the sound file addressed Sweden and the Swedish people and talked about Sweden's silence over the caricatures of the Prophet Mohammed by artist Lars Vilks and Sweden's presence in Afghanistan.

"Our actions will talk for themselves. As long as you do not end your war against Islam and humiliation of the prophet and your stupid support for the pig Vilks," TT quoted the man on the sound file as saying.

Sweden – which has so far been spared of any large terrorist attacks – raised its terror threat alert level from low to elevated in October because of "a shift in activities" among Swedish-based groups that could be plotting attacks there.

The security police then said the terrorism threat in Sweden, a Scandinavian country, remained low compared to that in other European countries, and no attack was imminent.