Firefighters rushed in to save people trapped inside
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Terrified witnesses spoke of a blast just moments before a huge fire swept through a shopping centre in Asuncion.
"There were sparks as if fireworks were going off," survivor Francisco Barrios told the AP news agency.
"The store quickly caught fire and filled with smoke, triggering total confusion. I lost my wife and kids as I rushed to get out," Mr Barrios said.
More than 200 people are known to have died at the Ycua Bolanos centre, and there are fears that the death toll will rise.
The fire quickly spread through the building, causing the ground floor of the store to collapse into the underground parking garage - instantly killing many customers in their cars.
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When they arrived, the police and firemen opened the doors, but it was already too late
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In the ensuing scenes of chaos and panic, firefighters rushed in, trying to save those who still were alive but trapped inside the shopping centre.
They also carried out many charred bodies in their arms.
Some of the victims were found inside hugging each other, including a woman holding a small child in her arms, one of the firefighters told local radio.
Relatives stood outside the Ycua Bolanos centre in an Asuncion suburb, desperate for any news about their loved ones.
"I need information on my son. He's not in any of the hospitals I've contacted," an inconsolable woman told Reuters news agency.
Witnesses also told local television that doors within the centre had been deliberately closed to prevent people leaving without paying.
"When they arrived, the police and firemen opened the doors, but it was already too late," witness Rosa Resquin told reporters.