Gun found as police hunt Melbourne killer

Melbourne's CBD is in lockdown after a gunman killed one person and wounded two more in a rush-hour shooting this morning.

The shooting happened at about 8:15am on the corner of Flinders Lane and Williams Street.

Police say the shooter opened fire with a handgun at almost point-blank range after a man tried to stop him as he dragged a woman from a taxi on Flinders Lane.

One man died at the scene while a 24-year-old woman and a man in his 30s were rushed to the Royal Melbourne Hospital in a critical condition. An ambulance service spokesman said they both had gunshot wounds to their upper bodies.

Police homicide squad detectives swamped the area and later said they had recovered a gun from a building site on the corner of Queen Street and Flinders Street. They would not confirm that it was the weapon used in the shooting.

ABC reporter John Fasham, at the scene, said workers at the building site had seen a man run into the site and discard what looked like a gun and some clothing.

The gun was an automatic or semi-automatic pistol and was hidden under the clothing.

Police helicopters hovered overhead and roads were closed as police searched for the gunman, who had been seen walking away down Flinders Lane after the shooting. Workers in the Melbourne CBD were told to stay inside.

Police say the gunman is aged between the late 20s and early 30s, with short brown hair, about 180cm tall and was wearing dark denim jeans and a dark Adidas jacket.

Eyewitness Malcolm Bates said: "There are police everywhere looking for him. All the buildings in the area are in lock down, we are in full lock down, and there are police and ambulances everywhere."

Police say they want to talk to the taxi driver and a cyclist who was riding nearby at the time of the shooting.

Police Inspector Glenn Weir urged locals not to panic.

"There are numerous police attending the search within the vicinity of the incident and there's a large cordon and containment operation under way as we speak," he said.

"We're just asking the public not to panic and just assist police if requested."

Inspector Weir says it appears the gunman knew the victims.

"There is no suggestion this is a random act - it appears there was a relation [between] the gunman and the victims, so we are asking people not to panic," he said.

'Point-blank' range

Mr Bates was near the scene at the time of the shootings.

"Basically about 8.10am a gentleman grabbed a lady by the scruff of the neck, tried to get into a taxi, then the lady got away, he turned, pulled out a weapon and shot three people at basically point-blank," he told ABC Local Radio.

Bystander Ross Murchie said: "A girl came out of a building over the road, she was screaming and a guy had her by the hair.

"She tried to grab hold of a taxi that was going by and the couple of bystanders went over to ask what was happening. He let go of her hair, pulled out a gun and shot them all."

Another witness said he saw two men run to the aid of a woman who was being dragged by the hair out of a taxi by another man.

"There was a couple of guys [who came] to assist and after that the guy that was holding her by the hair just eventually gave in and reached out for the gun and shot one of the guys twice and shot the girl and shot the other guy," he said.

Brian Cottrell was also near the shooting and he says he feels lucky to have escaped injury.

"You don't expect it, especially I mean, it could have been us," he said. "We just walked around the corner, and our van's only like two metres away from where the shooting was so ... you never know, it could have been us."

Another eyewitness, known as 'James', said he believed two or three people were involved, only one with a handgun. He said the shooter shoved the handgun into his pants and fled down Flinders Lane.

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