German police arrested a Saudi Arabian man after a deadly car-ramming attack on a Christmas market Friday in which an SUV barrelled through a crowd of revellers at high speed, leaving a trail of bloody carnage.

At least two people were killed, one of them a young child, and 68 injured, said authorities in the city of Magdeburg, located about 130 kilometres (80 miles) southwest of Berlin.

The suspect was a 50-year-old medical doctor from Saudi Arabia living in the eastern state of Saxony-Anhalt, said regional premier Reiner Haseloff, speaking at a scene cordoned off and guarded by police commandos.

"We have arrested the perpetrator, a man from Saudi Arabia, a doctor who has been in Germany since 2006," he told reporters, calling the attack a "catastrophe" for the city and the country.

"From what we currently know he was a lone attacker so we don't think there is any further danger."

German media partially named the suspect as Taleb A. and said he was a doctor of psychiatry.

The black BMW barrelled through the crowd at high speed just after 7:00 pm local time (1800 GMT) when the market was filled with revellers.

Video footage showed the driver's arrest as police with their handguns trained shouted "lie down, hands on your back, don't move!" at the bearded man with glasses who was lying on the ground next to the heavily damaged car.

Police said the vehicle drove "at least 400 metres across the Christmas market" leaving a trail of bloodied casualties, debris and broken glass at the city's central town hall square.

Ambulances and fire engines rushed to the chaotic site, which was doused in blue police lights and wailing sirens, as badly injured people were treated on site and rushed off to hospitals.

Cries and screams rang out as around 100 emergency responders deployed to the litter-strewn market decorated with Christmas trees and festive lights.

"The pictures are terrible," said city spokesman Michael Reif.

The deadly carnage recalled a 2016 jihadist attack in which a Tunisian man driving a lorry killed 12 people in a Christmas market in Berlin, the country's worst such attack.

A 13th victim died later having suffered serious injuries in the assault, claimed by the Islamic State (IS) group.

German Chancellor Olaf Scholz wrote on X that "the reports from Magdeburg raise the worst fears".

"My thoughts are with the victims and their families. We stand by their side and by the side of the people of Magdeburg. My thanks go to the dedicated rescue workers in these anxious hours."

Scholz was expected to travel to the city on Saturday, said the state premier.

German Interior Minister Nancy Faeser has recently called on people to be vigilant at Christmas markets, although she said that authorities had not received any specific threats.

The domestic security service had warned it considers Christmas markets to be an "ideologically suitable target for Islamist-motivated people". (AFP)