The explosion happened close to the Diamond area in the city centre There has been an explosion in Shipquay Street in Londonderry.
There are no reports of any injuries or damage.
The area was evacuated along with Ferryquay Street, Butcher Street and Bishop Street after an alert began in the Diamond area in the city centre.
A number of business premises were also evacuated. Police are warning motorists and shoppers to expect major disruption.
NI’s First Minister Peter Robinson condemned the attack and said those responsible had nothing to offer society except “death and destruction”.
Sinn Fein councillor in the area, Gerry MacLochlainn said the bomb attack happened at a building society.
“Thankfully this was a small device and no injuries and no serious damage was caused,” he said.
“The people who carried out the attack need to realise that they have been rejected by the republican community and should desist immediately.”
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