Counter terror police are investigating after a knifeman ran amok in Manchester's Arndale Shopping Centre "lunging at people" at random.
Five people were taken to hospital with stab injuries following the attack at around 11am yesterday.
Witnesses described a scene of terror as shoppers, some with injuries, sought refuge in stores.
One shop worker, who gave his name only as Jordan (23), said: "A man was running around with a knife lunging at multiple people, one of which came into my store visibly shaken with a small graze.
"Soon after, security staff told all retail staff to close their doors and move the public to the back of the stores."
A spokesman for Greater Manchester Police said: "We can confirm that five people have been stabbed and taken to hospital.
"Given the location of the incident and its nature, officers from Counter Terrorism Police North West are leading the investigation as we determine the circumstances.
A man in his 40s was arrested at the scene on suspicion of serious assault."
Later, Assistant Chief Constable Russ Jackson said: "He was initially arrested for serious assault and taken to police custody. He's now been arrested on suspicion, preparation and instigation of an act of terrorism."
Social media posts showed a large number of officers at the scene.
The North West Ambulance Service said it attended after being called at 11.17am to a stabbing incident.
The service refused to give details of the severity of the injuries.
Jordan, who has only been working at the centre for a few months, said the attack took place on the ground floor.
Freddie Houlder (22), from Market Drayton, was in the Arndale Centre when he heard "a load of screams just outside" the shop he was in.
He said a woman then came into the shop and told others "a guy just ran past the shop and tried to stab me".
Mr Houlder added: "Luckily she had quite a thick jacket. She thought originally it was a fake knife because of how easily it grazed off but police came in and said it was a real knife and she burst into tears."
He said he was evacuated several minutes later, at which point he saw "a bunch of curtains covering someone seriously injured or dead, I don't know".
"I definitely don't think it was gang violence because this guy was going around trying to stab random people," said Mr Houlder.
UK Prime Minister Boris Johnson said he was "shocked by the incident and my thoughts are with the injured and all those affected".
Bev Hughes, Greater Manchester's deputy mayor for policing, crime and fire, said: "I want to praise Greater Manchester's emergency services for their swift and professional action.
"Our thoughts are with the five people injured.
"The scene has been secured and all emergency services are engaged in ensuring public safety - the investigation is ongoing."
The Arndale Centre is just a few hundred yards from the Manchester Arena and Victoria Railway Station - both of which have been the scene of recent terror attacks.