A man has opened fire with an assault rifle and thrown grenades in the Belgian city of Liege, staging an attack in which five people died including the gunman himself, officials said.

Those killed in Tuesday's attack included two teenage boys and a 75-year-old woman. Officials said that at least 120 others were also wounded in the attack, which occurred 90km east of Brussels.

Judicial sources named the lone attacker as Nordine Amrani, who was known to police.

The sources said police had recently raided his Liege home seeking cannabis plants, but had found arms instead. In 2008, he was sentenced to almost five years in prison for illegal possession of arms and growing cannabis.

Despite Amrani's criminal history, Belgium's federal crisis centre said the attack was neither a terrorist incident nor linked to a pending criminal trial.

Amrani launched the attack near a bus stop at Place Saint Lambert, a central shopping square which is the site of Liege's Christmas market and its main courthouse.

While it was not clear how he had died, local media reports indicated that he may have committed suicide.

'Completely scared'

Gaspard Grosjean, a journalist for local Liege newspaper La Meuse, ran over to the square just after attack.

"We saw people with bullet wounds in their shoulders, their hands," he said, adding that he had seen one dead body.

"I see people completely scared, people are crying, everyone is on their phones."

Police were on the scene quickly and sealed off the square.

"The city centre is completely cordoned off. People are sheltering in shops or in buildings. Police are in position," a town hall employee told the AFP news agency.

"Luckily the mayor had postponed the opening of the Christmas market due to bad weather and high winds. Otherwise many more would have died," the employee added.

A spokesman for Belgium's crisis centre said ambulances had been called in from the Netherlands. To provide immediate assistance, a museum on the square had been converted into a makeshift hospital.