Saturday's killing has added fears about security in the world's biggest oil-producer.

In a separate incident, police found a car rigged with explosives in a suburb of the capital, Saudi-owned television station al-Arabiya reported.

It was not immediately clear whether there was any link between the discovery and the late-afternoon shooting.

Witnesses said the American was shot as he parked his car in front of his villa in the suburb of Malazz.

"There were bullet holes in the rear window of the car and the driver's window was also shattered," one witness said.

Foreigners have been targeted in
a string of recent attacks in Saudi

A US embassy spokeswoman said: "The victim is believed to be an American male. There has been a shooting death."

Saudi-born Usama bin Laden's al-Qaida network, blamed for the September 2001 attacks on US cities, has vowed that 2004 would be "bloody and miserable" for Saudi Arabia, a key US ally.

Fears about the security situation in the world's biggest oil exporter helped push world oil prices to record highs earlier this month before producers pledged to hike output.

Al-Arabiya said police were chasing suspects in the east of the city. The Interior Ministry confirmed the victim was American.

Americans warned

In Washington, the US State Department said the man's identity was still not known.

"We're investigating the circumstances with the Saudis," official Adam Ereli said. Washington has urged its citizens to leave Saudi Arabia.

"Those Americans who choose to remain here should exercise the utmost caution as they go about their daily lives," US ambassador to Riyadh, James Oberwetter, said in a statement. He lauded the kingdom's "determination" to combat armed dissidents.

The TV report gave no details about the discovery of the car bomb, but witnesses saw a car which police were preparing to tow away after cordoning off an area of north Riyadh where an Islamic university is located.

Saudi security forces have been
battling al-Qaida for a year 

Two residential compounds are nearby.

On Tuesday, a US military contractor was shot dead at his house in Riyadh in the fifth attack on Westerners in the kingdom since early May.

On Sunday a BBC cameraman was killed and a correspondent wounded in a drive-by shooting in Riyadh.

In one of the biggest attacks, 22 civilians were killed when armed men suspected of links to al-Qaida went on a shooting spree on 29 May and took dozens of foreigners hostage in the oil city of Khobar.

Heightened fears

Saudi officials have so far remained silent on what measures they have taken to safeguard foreigners from political violence. 

The attacks have heightened fears among tens of thousands of expatriates and raised doubts over the grip of security forces.

"There is no doubt the devil is driving them and they are supported by those against Islam,"

Crown Prince Abd Allah
Saudi Arabia's de facto ruler

An estimated six million foreigners work in Saudi Arabia, including 35,000 Americans and 30,000 Britons.

Saudi Arabia's de facto ruler Crown Prince Abd Allah vowed on Saturday that the anti-government
forces would not escape justice.

"There is no doubt the devil is driving them and they are supported by those against Islam," he said in comments quoted by official news agency SPA.

The Saudia government has been fighting al-Qaida supporters for a year, arresting and killing many, including eight on a wanted list of 26 armed dissidents.

Riyadh says the armed dissidents have responded to the clampdown by attacking so-called soft targets.