Bavarian police confirmed that there had been a detonation around 100 meters from the refugee centre at around 2.30 pm. But they said it was not an explosion and that it had not caused any injuries. "There is no particular threat to the area," police said.
The initial police report states that explosives experts are on their way to the scene but that they do not believe there was any explosive substance in the suitcase, saying it was more likely aerosol cans which had been packed inside.
Police are now searching for a man and a woman who they believe to be behind the scare.
Reuters had initially reported that the explosion happened outside a reception centre for refugees in Zirndorf, a western suburb of Nuremberg in northern Bavaria.
Bavarian broadcaster Bayerische Rundfunk (BR) later reported that no-one had been injured in the incident.
People who heard a loud bang at an allotment area arrived to find the burning suitcase at the scene. Police arrived shortly afterwards, BR reports.
Bavaria has been badly shaken by several violent attacks on public spaces in the last week and a half.
Last Monday a young refugee attacked train passengers with an axe in Würzburg. Another teenager went on a shooting rampage in Munich on Friday killing nine other people.
On Sunday a Syrian man blew himself up in Ansbach, a town around half an hour's drive southwest of Nuremberg.
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