The news came hours after police launched a manhunt for the driver of a van who ploughed into crowds of people on one of Barcelona's busiest thoroughfares, killing 13 people and injuring 100.

"We are working on the hypothesis that events in Cambrils respond to a terrorist attack. We have killed its alleged perpetrators," Catalan police wrote on Twitter.

The El Mundo newspaper reported that four people had been killed in Cambrils, which is 120 kilometres south of Barcelona, without citing any source.

The newspaper La Vanguardia reported that a shootout had taken place on the town's harbour side. Police had earlier warned residents to stay indoors.

Spain's public broadcaster, RTVE, is reporting that the suspects shot and killed south of Barcelona may have been carrying suicide explosive belts.

The broadcaster said the suspects tried to carry out a similar attack to the one in Barcelona, which left 13 people dead earlier Thursday, by driving a vehicle into pedestrians. It said seven people were injured by the suspects, two seriously.

The channel ran a video of Cambrils' promenade in which volleys of gunshots could be heard while sirens wailed and people's screams could be heard.

Al Jazeera's Tyson Shine, reporting from Barcelona, said it's not yet clear if the attack in the coastal city of Cambrils - about an hour and a half's drive from Barcelona - is linked to Thursday's attack. 

Attack in Barcelona

The Islamic State of Iraq and the Levant (ISIL, also known as ISIS) group said via its affiliated Amaq news agency on Thursday that its "soldiers" were responsible for the earlier attack on Las Ramblas, a popular tourist spot in Barcelona.

Catalan police chief Josep Luis Trapero said two men had been arrested in connection to the attack, a Moroccan and a Spanish national from the North African Spanish enclave of Melilla.

However, a third man believed to have been the driver of the van, was still on the run, Trapero told reporters.

The attack on Las Ramblas was "obviously a terrorist attack [carried out] with the intent to kill as many people as possible," he said.

He also said that an explosion which killed one person and destroyed a house in the town of Alcanar, 200km south of Barcelona, on Wednesday night was "clearly" linked to the attack.

However, he said that so far there was no evidence that another incident, in which police shot dead a man after he tried to evade a checkpoint while leaving Barcelona hours after the attack, was connected.

Spanish Prime Minister Mariano Rajoy, who cut short his holiday to travel to Barcelona, announced three days of official mourning.

"We are not only united in mourning. We are above all united in the resolute will to defeat those who want to take away our values and our way of life," he said.

Catalonia's Interior Minister Joaquim Forn said he expected the Bareclona death toll to rise.

Europe has been hit by a series of deadly terrorist attacks using vehicles over the last two years including deadly incidents in Nice, Berlin and two in London.

Spain's worst terrorist attack was in March 2004 when 191 people were killed by bombs planted by al-Qaeda on commuter trains in Madrid.

News24