Just after 7pm on Tuesday gun shots were heard at the market, which attracts millions of tourists each year, in Place Kleber, in the centre of the city in eastern France.
Police armed with machine guns were seen running into the square moments later and it was evacuated.
Emmanuel Foulon, a press officer for the European Parliament, which is based in the city, was in the square at the time and said there was panic and everyone got to the ground in restaurants around the square.
Malta MEP Roberta Metsola said she was in lockdown inside the European Parliament building.
People in the area were told to remain inside.
France remains on high alert following a series of Islamic State inspired attacks in 2015 and 2016, which killed more than 200 people.
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