Last updated 3.10pm - Death toll rises to three 

A gunman opened fire on a tram in the Dutch city of Utrecht on Monday, killing three people and wounding at least nine in what authorities are considering a terrorist attack.

"At this stage, we can confirm three deaths and nine wounded, three of them seriously," Utrecht Mayor Jan van Zanen said in a video statement on Twitter.

Armed counter-terrorism police launched a huge manhunt for the attacker, urging local residents in one of the Netherlands' biggest cities to stay indoors in case of further incidents.

Police released a picture of the Turkish-born suspect, naming him as 37-year-old Gokmen Tanis, and warning people not to approach him.

Dutch Prime Minister Mark Rutte said the incident, just days ahead of local elections, was "deeply disturbing" and police stepped up security at mosques and airports.

A body covered in a sheet could be seen on the tracks in Utrecht as armed police and emergency services swarmed around the scene, while helicopters hovered overhead.

"We cannot exclude a terrorist motive," the head of the Dutch national counter-terrorism service, Pieter-Jaap Aalbersberg, told a brief news conference before rushing off for a crisis meeting.

Aalbersberg said there had been shooting at "several locations" but did not give further details.

"A major police operation is under way to arrest the gunman," he added.

The terror alert level in Utrecht was raised to maximum level five, he added.

Police later surrounded a building a few hundred metres away, an AFP reporter at the scene said, but it was not clear if the gunman was inside.

'New incidents not excluded' 

Police in Utrecht said the shooting took place on a tram in the 24 Oktoberplein area of the city and that "a possible terrorist motive is part of the investigation".

"Multiple people have been injured. The surrounding area has been cordoned off and we are investigating the matter... Several trauma helicopters have been deployed to provide help."

One witness told NOS News they had seen an injured person running out of the tram with blood on her hands and clothes who then fell to the ground.

"I brought her into my car and helped her. When the police arrived, she was unconscious," the witness, who was not named, told the broadcaster.

The Utrecht municipality said it advised "everyone to stay indoors until more is known. New incidents are not excluded." The local hospital said it had set up a crisis centre.

Local media showed photographs of masked, armed police and emergency vehicles surrounding a tram that had stopped near a road bridge.

Tram traffic in the area was halted.

Mosque security 

The Dutch military police said they were on "high alert" and were boosting security at the airports and at other vital buildings in The Netherlands.

Mosques in Utrecht had shut for the day following the attack, the ANP news agency said, which comes just days after 50 people were killed at mosques in New Zealand in a rampage by an alleged white supremacist.

All major political parties including Rutte's VVD announced that they were suspending campaigning ahead of Wednesday's local elections which will determine the make-up of the Dutch senate.

Rutte also cancelled a meeting with his ruling coalition and was being briefed on the situation, officials said. He was due to give a short statement at 1330 GMT.

An increased police presence could be seen outside the parliament and Rutte's office in The Hague.

Police in the port city of Rotterdam said they had increased security outside mosques.

The Netherlands has been largely spared the kind of attacks which have rocked its closest European neighbours in the past few years, but there has been a series of recent scares.

In August, a 19-year-old Afghan with a German residence permit stabbed and injured two American tourists at Amsterdam's busy Central Station before being shot and wounded.

In September, Dutch investigators said they had arrested seven people and foiled a "major attack" on civilians at a major event in the Netherlands.

They said they had found a large quantity of bomb-making materials including fertiliser likely to be used in a car bomb.

The men were arrested in the cities of Arnhem and Weert.

In June, two terror suspects were arrested while close to carrying out attacks including at an iconic bridge in Rotterdam and in France, prosecutors said.

The men aged 22 and 28, who were of Moroccan origin, made a film at the Erasmus bridge in which they sang a martyrdom song, they said.