Police have confirmed the bomb planted in a bank in Newry, by two masked men, was viable.
The men left the device, which they were carrying in a holdall, in the bank at Hill Street at about 9.40am on Monday - before they made off on foot towards the Water/North Street area.
Serious disruption was caused in the city centre, with premises in Margaret Square evacuated as army bomb experts made the device safe.
"This was a viable device which was capable of causing death, serious injury and substantial damage to the area," Area Commander for Newry and Mourne, Chief Inspector Davy Beck, said.
"I would place on record my gratitude to the Army Technical Officer and his team for their actions which clearly prevented the detonation of this device.
Newry city centre is returning to normal, but an investigation into the attempted bombing has been launched.
"I would appeal to the community for information about the people who conducted this cowardly attack on the people of Newry & Mourne," Chief Inspector Beck added.
Local SDLP MLA Dominic Bradley said people were very angry about the level of disruption caused to daily and commercial life.
"Moreso, they're angry that a device like this can put in danger life and limb of the local community," he said.
"And, at a time when Newry is mourning the two women brutally murdered in Turkey, it underlines the total futility of this type of activity."
Margaret Square, Needham Bridge, Hill Street and parts of Water Street and Trevor Hill were all cordoned off for most of the day.
One Polish eye-witness told UTV: "At the beginning, I thought it was just a student prank - now, it's a bit strange for me because I didn't expect this would be a bomb scare.
"I'm just really surprised and shocked that, on a normal day, in the morning, something like this can happen."
Meanwhile, a separate alert in Co Antrim is continuing after a suspicious package was found in the town of Ballymoney.
The bomb squad is examining the object at Ozone Avenue, while a number of residents have been evacuated from their homes.
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