The emergency services tweeted that two people had died, while another person was seriously injured and six had suffered light injuries in the blast. "At least four floors have been affected by the explosion in the building in Calle Toledo," they tweeted.
"Nine fire crews and 11 ambulances have gone to Calle Toledo following an explosion in a building," they had said earlier.
Though the cause of the blast was not immediately clear, officials said it was a suspected gas leak. Images from the scene showed the walls on the top four or five storeys had been blown out, with debris littered far and wide.
Madrid Mayor Jose Luis Martinez-Almeida told reporters at the scene it seemed that "there was a gas explosion in the building".
The incident occurred in a building next door to an elderly care home but no one there was hurt, La Paloma residence said in a statement on its website.
'Never heard something as loud before'
The street was completely closed off to traffic and pedestrians, AFP correspondents said.
"The noise was very loud, very loud, really," Lorenzo Fomento, a 43-year-old Italian salesperson who was working from home at a nearby apartment, told AFP by telephone.
"I never heard something as loud before," he added.
A witness told Telemadrid broadcaster that there was at least one person trapped inside.
A Reuters reporter saw that one building had collapsed in a central Madrid blast, with smoke coming out of the building and rescue workers evacuating elderly people from a nearby nursing home, while a reporter for TVE public broadcaster said several had been injured.
BBC Mundo, the BBC World Service's foreign language outlet, reported that the Madrid blast was likely a gas explosion.
According to the publication, Spanish newspaper El PaĆs quoted a spokesperson for the company that runs the establishment as saying no employee or resident was injured but authorities were "evacuating residents to the hotel across the street" — Hotel Ganivet.
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