Police in Northern Ireland on Monday issued a security alert in Derry after receiving a report about a hijacked van, and arrested a fifth man over a car bombing in the city being linked to a dissident republican paramilitary group.

"Security alert currently in Derry/Londonderry in Circular Rd area after report van hijacked around 11.30am by 3 masked men who threw an object in the back before abandoning it," the Police Service of Northern Ireland (PSNI) tweeted.

Police superintendent Gordon McCalmont said in a statement: "We anticipate significant disruption to the local community while we work to make the scene safe."

Police also said they had arrested a 50-year-old man under the Terrorism Act as part of their investigation into the car bomb that detonated on Saturday outside the courthouse in the border city of Derry.

Four men, aged 42, 34, 21 and 21, were arrested on Sunday.

The bomb has heightened concerns about the risks of Brexit disrupting a hard-won peace in the British province.

Police have said they believe a paramilitary group calling itself the "New IRA" was behind the blast.

"We haven't seen a device of this nature function for quite a while. It's a high-risk tactic," Mark Hamilton from the PSNI told BBC radio.

Hamilton said the New IRA (Irish Republican Army) has recently mainly been linked to vigilante incidents and the bombing was "probably the most significant attack in recent years".

A 1998 peace deal largely brought an end to three decades of sectarian bloodshed in Northern Ireland between republican and unionist paramilitaries, as well as British armed forces, in a period known as "the Troubles".

Some 3,500 people were killed in the conflict - many at the hands of the IRA.

Hamilton said on Sunday that the New IRA were "determined to drag people back to somewhere they don't want to be".

'Nerves are shattered'

There are concerns the attack could be a sign of paramilitaries seeking to exploit the current political turbulence over Northern Ireland and its border with the Republic of Ireland, caused by Brexit.

"Dissident bomb fuels fear of return to terror after Brexit", ran a headline on Monday's Irish Independent.

"Incidents such as the Derry bombing remind us that the danger of a 'hard' or visible border would really be a target for these mindless yobs who want to haul us all back to our recent dark past," the newspaper said in an editorial.

"This danger must galvanise all our political leaders to do everything they possibly can to avoid such a possibility."

German Foreign Minister Heiko Maas, speaking in Brussels, cited the Derry bombing as a warning sign that Brexit must not disrupt the Northern Ireland peace process.

"I think it's important that there aren't any decisions that ultimately lead to a hard border between Northern Ireland and Ireland because, as we have seen at the weekend, nerves are shattered there as well," he said.

'Act of terror'

The Irish Times newspaper's security and crime editor Conor Lally said police officers and politicians had been warning Brexit could become "a rallying call for dissident republicans".

Police received a telephone tip-off that the device had been planted and an evacuation was nearing completion when the explosion occurred.

There were no casualties.

The incident has been condemned by political parties across the traditional republican and unionist divide in the province, as well as by leaders in the Republic of Ireland. 

Prime Minister Leo Varadkar called it "an appalling, reckless and cynical act of terror".