Panic and terror in Munich shooting rampage

Residents were going about their shopping at the busy Olympia mall, some eating at a McDonald's restaurant, when the horror began.

Panicked shoppers fled to safety as armed anti-terror police roamed the streets in search of the assailants, still at large hours after their rampage began.

Eight people have been confirmed dead. Police have also found a body near the shopping centre and are trying to determine whether he was one of the assailants.

Police called on residents of Germany's third-largest city to stay indoors, throwing the economic hub into lockdown.

"Attention -- avoid the neighbourhood around the OEZ (Olympia). Stay in your homes. Leave the street," a Munich police tweet said.

The Bavarian capital's main train station was evacuated and bus, metro and tram services were suspended.

Survivors of the rampage described scenes of horror.

"We entered McDonald's to eat... then there was panic, and people ran out," one woman told Bavarian public television.

She said she heard three gunshots, "children were crying, people rushed to the exit in panic."

A video posted on social media appeared to show a man dressed in black walking away from the McDonald's while firing repeatedly on a group of people, screaming as they fled.

A man who was shopping in the mall and identified himself as Abim told rolling news channel NTV that one of the gunmen was "dressed as Father Christmas and wearing sunglasses", but the account could not be immediately verified by police.

- 'Bodies, injured people' - Another man who said he worked at one of the shops in the mall, described how he came face to face with one of the assailants.

"I looked towards him, he fired on two people and I fled the building by climbing a wall.

"And then I saw bodies and injured people," he said.

According to one of his colleagues, one of the attackers was wearing military boots and carrying a backpack, he said.

The shopping centre, which opened in the 1970s and bills itself as Bavaria's biggest, was surrounded by armed police, while a helicopter buzzed overhead.

The mall is not far from the Olympic stadium which hosted the 1972 summer Games and the athletes' village, the site of the massacre of 11 Israeli athletes by the Palestinian Black September group.

In a neighbourhood located near the mall, schoolchildren and their parents were celebrating the end of the academic year when news of the shooting spree broke.

An AFP correspondent saw the families rush home, on foot or by car.

Bars and cafes, normally bustling on a warm summer evening, rushed to close as German television broadcast footage of deserted streets.