Melbourne attack: Stabbing spree in city center was terrorism, police say

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The street where the vehicle caught fire was the scene in January 2017 of a fatal but not terror-related incident in which a man drove his auto at pedestrians at high speed, killing six people and wounding about 30.

The 30-year-old planned to cause an explosion by igniting gas cylinders in his auto, police said.

The Somalia-born Shire Ali stabbed three men, with a man in his sixties dying at the scene and two others recovering in Royal Melbourne Hospital.

Australian Federal Police acting deputy commissioner Ian McCartney said the terrorism threat had been mitigated and it was limited to the lone attacker. He also died from his gunshot wound in hospital.

It's believed the raids are linked to yesterday's terror attack.

Police have said they believe the attacker acted alone and they are not searching for other suspects.

If it weren't for the heavy police presence and the TV news crews, a passerby at Bourke Street on Saturday morning might have no clue to the horror that unfolded here less than 24 hours ago.

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"Look, he is someone that was known to us but the information that we had through the night, we with working on, he wasn't somebody that we were actively monitoring to that we were actively monitoring to that level in relation to his activities, no".

Officers were confronted near the burning auto by a man "brandishing a knife and threatening them" while passers-by called out that people had been stabbed, he said. "When a firearm is the last resort, they're (police are) trained to shoot to kill, shoot to the body mass".

Marked police cars and vans were parked in front of the Target store where the attack occurred.

Commissioner Ashton also said there was no known link to James "Dimitrious" Gargasoulas, who is now on trial facing six charges of murder after allegedly mowing down pedestrians in January 2017.

ISIS have previously claimed responsibility for attacks that were later discovered to be unrelated to the organisation.

Mr Villasin said bystanders were screaming at police to shoot the knifeman.

Fire and rescue officials also found gas cylinders inside the vehicle.

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The horrifying scene was over in a matter of minutes after police shot the attacker, who died after being rushed to the hospital under police guard.

Authorities say Australia's vigilance has helped foil at least a dozen plots, including a plan to attack Melbourne at Christmas in 2016 and a plan to blow up a flight from Sydney to Abu Dhabi using a bomb disguised as a meat mincer.

Witnesses are still giving statements to that attack.

The man assaulted a police officer through the vehicle window, and then produced a knife and attempted to attack police officers.

"This is an evil and terrifying thing that has happened", Victoria State Premier Daniel Andrews said.

Ali was later shot by police as he lunged at officers following the deadly attack at Bourke Street on Friday afternoon, bringing the shopping area to a standstill.

Police identified the man responsible for Friday's attack as 30-year-old Hassan Khalif Shire Ali and said he was radicalized and inspired by the militant group's propaganda.

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