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A bomb that exploded in New York wounding 29 people and causing significant damage is being treated as an "act of terror", but officials believe there is no overseas link to the blast.

The explosion tore through Chelsea - one of the most fashionable district of Manhattan packed with bars, restaurants and luxury apartment buildings - late Saturday at around 8:30pm local time.

Police later discovered a second bomb four blocks away, which was safely defused and taken away for analysis.

The attack put New York on full alert, just one day before world leaders are due to gather in the city for the UN General Assembly.

Twin attacks

It came as an Islamic State group-linked news agency claimed that one of their "soldiers" carried out a stabbing attack in a shopping mall in Minnesota that left eight people injured also late Saturday.

Local police said the attack "made some references to Allah", but the motivation of the attack was unclear. The attacker was shot dead by an off-duty police officer.

In New York, police and law enforcement have sealed off the traffic for five blocks around the scene and dozens of officers were out in force Sunday.

An AFP photographer said there was lots of debris, including rubble and glass on 23rd Street, where the explosion happened.

"Whoever placed these bombs, we will find and they will be brought to justice," New York Governor Andrew Cuomo told reporters at the scene.

"A bomb exploding in New York is obviously an act of terrorism, but it's not linked to international terrorism. In other words, we find no ISIS connection, et cetera," said Cuomo.

We have no reason to believe at this time that there is any further immediate threat. - New York Governor Andrew Cuomo

"But a bomb going off is generically a terrorist activity. That's how we'll consider it. And that's how we will prosecute it," he added.

Security beefed up

An extra 1,000 state police and National Guard will be deployed to airports, bus terminals and subway stations to reassure New Yorkers returning to work on Monday that the city is up and running, he said.

"We have no reason to believe at this time that there is any further immediate threat," Cuomo said.

He said that while there was no evidence of an international terror link "at this time", but it was still "very early in the investigation".

The explosion outside a building on 23rd Street, between Sixth and Seventh Avenues, caused "significant" property damage with glass and shrapnel "everywhere", the governor said.

While the two devices planted in Manhattan appear to be similar, at this stage they seem to be different than a pipe bomb that exploded in the neighboring state of New Jersey on Saturday, he said.

The New Jersey blast occurred in Seaside Park during a Marine Corps charity run and caused no injuries.

There were up to four timed explosives but only one detonated, Al Della Fave, a spokesman for the Ocean County prosecutor, told CNN.

New York lauds itself as the safest big city in the United States. Violent crime has become rare in Manhattan and stringent security checks the norm in many areas since the 2001 al-Qaeda hijackings destroyed the Twin Towers.