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Two people including one attacker were killed in central Vienna on Monday evening in what Austrian Chancellor Sebastian Kurz described as a "repulsive terror attack".
Police said there was "one deceased person" and several injured, including one police officer.
Meanwhile, one suspect was "shot and killed by police officers," Vienna police said on their Twitter account.
Interior Minister Karl Nehammer told public broadcaster ORF that the operation against the attackers was still underway at around 11 pm local time (2am Tuesday, UAE).
Vienna Mayor Michael Ludwig told local media that 15 people had been taken to hospital, of whom seven were seriously injured.
The attack had been carried out by "several suspects armed with rifles", said police, adding that there had been "six different shooting locations".
First gunshots were fired at around 8:00 pm at the Seitenstettengasse in the city's centrally-located first district.
The shooting began just hours before Austria was to re-impose a coronavirus lockdown to try to slow the spread of Covid-19, and bars and restaurants played host to people enjoying a final night of relative freedom.
Kurz said on Twitter that "we are experiencing difficult hours in our republic".
"Our police will act decisively against the perpetrators of this repulsive terror attack," he said, adding that "we will never be intimidated by terrorism and we will fight this attack with all means".
Kurz said that while police were concentrating on the anti-terror operation, the army would take over the protection of important buildings in Vienna.
Nehammer urged Vienna residents to remain in their homes and keep away from all public places or public transport.
Frequent sirens and helicopters could be heard in the city centre as emergency services responded to the attack.
An AFP photographer said that large numbers of police were guarding an area near the city's world-famous opera house.
The location of the initial shooting is close to a major synagogue.
The president of Vienna's Jewish community Oskar Deutsch said that shots had been fired "in the immediate vicinity" of the Stadttempel synagogue, but added that it was currently unknown whether the synagogue itself had been the target of an attack.
He said that the synagogue and office buildings at the same address had been closed at the time of the attack.
- 'Cowardly act' -
"It sounded like firecrackers, then we realised it was shots," said one eyewitness quoted by public broadcaster ORF.
A shooter had "shot wildly with an automatic weapon" before the police arrived and opened fire, the witness added.
Austria had until now been spared the sort of major attacks that have hit other European countries.
French President Emmanuel Macron tweeted that "we French share the shock and sorrow of the Austrian people".
"After France, it's a friendly nation that has been attacked," he added, referring to the killing on Thursday of three people by a knife-armed attacker in southern city Nice and the beheading of a schoolteacher by a suspected Islamist outside Paris several days before.
EU Council chief Charles Michel tweeted that the bloc "strongly condemns this cowardly act".
And Germany's foreign ministry tweeted that the reports from Austria were "horrifying and disturbing".
"We can't give in to hatred that is aimed at dividing our societies," the ministry added.
Czech police said they had started random checks on the border with Austria.
"Police are carrying out random checks of vehicles and passengers on border crossings with Austria as a preventive measure in relation to the terror attack in Vienna," Czech police tweeted.
Italian Prime Minister Giuseppe Conte also "strongly condemned" the shootings.
"There is no room for hatred and violence in our common European home," he said on Twitter in Italian and German.
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