Updated 7.15pm 

Finnish police said today that a man suspected of knife attacks that killed two people in the city of Turku appeared to have specifically targeted women.

The 18-year-old Morcaan suspect arrested after being shot in the leg by police had arrived in Finland last year, police said. They said they later arrested four other Moroccan men over possible links to him and had issued an international arrest warrant for a sixth Moroccan national.

Finnish broadcaster MTV, citing an unnamed source, said the main suspect had been denied asylum in Finland. The police said only that he had been "part of the asylum process".

The case marks the first suspected terror attack in Finland, where violent crime is relatively rare.

"The suspect's profile is similar to that of several other recent radical Islamist terror attacks that have taken place in Europe," Director Antti Pelttari from the Finnish Security Intelligence Service told a news conference.

The police said they were investigating possible links to Thursday's deadly van attack in the Spanish city of Barcelona.

Both of those killed in the Turku attack, and six of the eight who were wounded, were women, the police said. The two who died were Finns, and an Italian and two Swedish citizens were among the injured.

"It seems that the suspect chose women as his targets, because the men who were wounded were injured when they tried to help, or prevent the attacks," said Crista Granroth from the National Bureau of Investigation.

"The act was cowardly ... we have been afraid of this and we have prepared for this. We are not an island anymore, the whole of Europe is affected," Prime Minister Juha Sipila said.

Screaming

"First thing we heard was a young woman, screaming like crazy. I thought it's just kids having fun ... but then people started to move around and I saw a man with a knife in his hand, stabbing a woman," said Laura Laine, who was sitting in a cafe during one of the attacks.

"Then a person ran towards us shouting 'He has a knife', and everybody from the terrace ran inside. Next, a woman came in to the cafe. She was crying hysterically, down on her knees, saying someone's neck has been slashed open."

Four of the wounded were still in hospital, three of them in intensive care, while the other injured persons would be sent home on Saturday, the hospital said.

Local media said the police raided an apartment in the eastern Turku suburb of Varissuo, which is home to a large immigrant population, and located about seven kilometres from the market square where the attacks took place.

Flags were at half mast on Saturday across Finland, whose Security Intelligence Service (SIS) raised the terrorism threat level in June to 'elevated' from 'low', saying it had become aware of terrorism-related plans.

Leaders of Turku's Iraqi and Syrian community condemned the attacks and said they would hold a rally of solidarity in the city's main square, but cancelled the plan due to security concerns.

An anti-immigration group was planning a demonstration in Helsinki.

"Terrorists want to pit people against each other. We will not let this happen. Finnish society will not be defeated by fear or hatred," Interior Minister Paula Risikko said on Twitter.

On Thursday, a suspected Islamist militant drove a van into crowds in Barcelona in Spain, killing 13 people and wounding scores of others. Finnish police said they were looking into any possible links between the Finnish stabbings and the attack in Spain and that they had issued an international arrest warrant for a sixth Moroccan national.