One person died, and two police officers were seriously injured on Saturday in a knife attack in eastern France that President Emmanuel Macron said was an "Islamist terror act."

Prosecutors said three more officers were lightly wounded in the attack in the city of Mulhouse, carried out by a 37-year-old suspect who is on a terror prevention watchlist, prosecutor Nicolas Heitz told AFP.

The suspect was in custody.

France's national anti-terror prosecutors unit (PNAT), which has taken charge of the investigation, said the suspect first attacked the municipal police officers, shouting "Allahu Akbar" (God is greatest).

A civilian passerby who intervened was fatally injured, the PNAT said in a statement. According to Mulhouse prosecutors, he was a 69-year-old Portuguese national.

Macron said there was "no doubt" that the incident was "a terrorist act," specifically "an Islamist terrorist act."

The government was determined to continue doing "everything to eradicate terrorism on our soil," Macron added.

Police established a security perimeter after the attack that happened shortly before 4:00 pm (2300 HKT) during a demonstration in support of the Democratic Republic of Congo in a busy part of Mulhouse, a city of around 110,000 inhabitants.

According to union sources, the suspect was born in Algeria and has been under judicial supervision and house arrest, with an expulsion order from France. (AFP)