Verviers, Belgium (BBN)-Two suspected jihadists have been killed in an anti-terror operation in eastern Belgium, officials say.
Prosecutor Eric Van der Sypt said a third person had been arrested in the raid in Verviers, and no police or members of the public were harmed, reports BBC.
Mr Van der Sypt told reporters police had targeted a group returning from Syria who had been about to launch attacks in a matter of hours.
Suspects had opened fire on police with assault weapons, he said.
"The suspects immediately and for several minutes opened fire with military weaponry and handguns on the special units of the federal police before they were neutralised," he said.
Anti-terror raids are also continuing overnight in Brussels and surrounding areas.
Earlier on Thursday two suspected Islamists were arrested in the suburb of Zaventem, local media reported.
Belgian officials say more than 300 people have left Belgium to fight with Islamic militant groups in Syria and Iraq.
'JUST TERRIFIED'
Belgian journalist Mark Eeckhaut told the BBC the suspects in Verviers had wanted to attack a police station and cause a large number of casualties.
The terror threat level in Belgium has been raised to three - the second highest, Mr Van der Sypt said.
Witnesses in Verviers reported hearing heavy gunfire for several minutes and at least three explosions.
Witness Marylou Fletcher told the BBC: "We were going back from shopping and saw the police cars. We thought there was an accident then we heard something blowing up. There were a lot of gunshots.
"My children cried. They are just terrified."
The area around the train station has been cordoned off and reports on social media say there is a heavy police presence in the town centre.
Belgian Prime Minister Charles Michel later said the security operation "shows the government's determination to fight those who want to spread terror", his spokesman said.
British Prime Minister David Cameron said events in Belgium "look like yet another indication of the huge risk we face from Islamist extremist terror in Europe".
"We have to remain extremely vigilant, we have to take all the steps we can to beat this evil," he told reporters in Washington where he is to hold talks with President Barack Obama.
Verviers is in the province of Liege, close to the German border, and has a population of about 56,000.
The incident comes a week after attacks in neighbouring France that killed 17 people. Belgian media has reported that some of the weapons used in those attacks were bought in Brussels.
However, Mr Van der Sypt said no weapons link with the killings in France had been established.
For the moment the Belgian authorities have ruled out a direct link with the attacks in France, the BBC's Chris Morris in Verviers reports.
But there are fears that the suspects captured or killed in this operation could have been inspired by the killings in France to accelerate their own plans, our correspondent adds.
The attacks in and around Paris - on satirical newspaper Charlie Hebdo, a kosher market and police - have heightened security fears in several European countries.
In May last year, four people were killed inside the Jewish museum in Brussels. A Frenchman of Algerian descent is in custody in Belgium over the attack.
BBN/SK/ANS-16Jan15-10:15am (BST)