A car bomb has exploded near a Madrid conference centre, injuring 43 people, hours before a royal visit.
The bomb is thought to have contained 20-30kg of explosives
Spanish police say a caller claiming to be from the Basque militant group Eta told a newspaper the group was planning to explode a device in the city.
The blast occurred at 0930 (0830 GMT) near the Juan Carlos I Convention Centre - one of the proposed venues for Madrid's 2012 Olympic bid.
Spain's King Juan Carlos and Queen Sofia had been due to visit the centre.
Spanish Prime Minister Jose Luis Rodriguez Zapatero, on a visit to Poland, condemned the attack, saying there was no room for "the terrorists of Eta and their supporters" in civil society or politics.
"Bombs will only lead you to prison," he said.
"They will never achieve any of their objectives with violence. And this feeling is overwhelmingly the majority view, not just among Spaniards, but also among all Basque citizens."
But the banned Basque separatist party, Batasuna, said calls for condemnation of the attack were "outdated".
Batasuna leader Joseba Permach said: "Some will still dare to demand that Batasuna condemn the attack, as if that were a magic wand to solve all problems."
The call to the Basque newspaper Gara was made shortly before the white Renault 19 car exploded near the Campo de las Naciones in the Avenida de los Andes.
Interior Minister Jose Antonio Alonso said police and explosives experts had been deployed after the warning, but the call had not been precise enough to locate the device before it went off.
Flying glass from nearby buildings is said to have caused most of the injuries when the bomb exploded outside a building belonging to the French computer manufacturer Bull.
Mr Alonso said police explosives experts estimated that the car bomb contained between 20-30kg of explosives. He said the fight against terrorism would continue.
Although Eta is widely believed to have been weakened after more than 200 arrests over the past two years, Mr Alonso acknowledged the group was still capable of carrying out attacks.
"It hasn't a political or social future but it has - as I have said in the past - operative capability," he said.
The BBC's Danny Wood, in Madrid, said the car bomb, the telephone call and the high profile venue were hallmarks of an Eta attack.
The attack happened on the same day as a police operation in the Basque country, Navarre and Valencia that has resulted in the arrest of 14 suspected members of Eta.
Last week the Spanish parliament rejected a plan for even greater autonomy for the Basque country.
Some Basque separatist deputies in the regional assembly had backed the plan, put forward by the Basque regional premier Juan Jose Ibarretxe.
Eta has been blamed for more than 800 deaths since the 1960s in its battle to form an independent Basque homeland. Eta's last attack was in the Costa Blanca on 30 January, when a device exploded in a hotel, slightly injuring one person.