Police in the Norway have set off a controlled explosion of a "bomb-like device" found in a busy area in Oslo's business district and also arrested a suspect.

No damage has reportedly been caused by the device, which was found in a plastic bag near the city centre.

The discovery led police to evacuate people from bars and restaurants around an area near the Groenland metro station on Saturday night.

A loud blast was heard shortly after the arrival of Oslo's bomb squad, witnesses said. The device was destroyed in a controlled explosion, news agency NTB reported citing police.

The noise suggested the device might have contained explosives, Svein Arild Jorundland, police commander, said.

The device appeared to be capable of causing only a limited amount of damage, police said.

A man who might have been carrying the device was detained at the scene and taken in for questioning.

Police arrested a suspect after the discovery of the explosives [Fredrik Varfjell/NTB/Reuters]

"The noise from the blast was louder than our explosives themselves would cause," a police spokesperson said, adding that further investigation would be conducted at the scene.

Norway's police security service, PST, said on Twitter that it had taken over the investigation from local police.

"The probe is at an early stage but I can confirm that the PST is handling it," Martin Bernsen, spokesperson, told public broadcaster NRK.

In neighbouring Sweden, a truck on Friday drove into crowds in Stockholm, killing four people and wounding 15 in what police said was an apparent "terror attack".

In 2011, Anders Behring Breivik , a right-wing nationalist , set off a car bomb in Oslo that killed eight people and destroyed Norway's government headquarters, before going on a shooting rampage that killed 69 people at nearby Utoeya island.

Source: News agencies