Several residential buildings were also damaged.

An hour after the blast a burnt-out car was found in the nearby town of Amorebieta, which Basque police said may have been used by the bomber.

Arrests

The blast came after Alfredo Perez Rubalcaba, interior minister, warned that an Eta attack was imminent.

Recent weeks have seen the arrests of a number of suspects, mainly in France, and 400 kilos of explosives seized.

The group has been blamed for 819 killings in its 40-year campaign for an independent Basque state.
  
Eta had declared a "permanent ceasefire" in March 2006, but then claimed responsibility for the bombing of Madrid airport on December 30, 2006 which killed two Ecuadoran men.

The government called off peace talks with the group after the airport bombing and the separatists formally declared the ceasefire over in June this year.