Defence Minister Peter Hultqvist told the Swedish daily Expressen that authorities were hunting for more suspects.
Mutar Muthanna Majid, an Iraqi, was arrested by police during an afternoon raid yesterday on a centre for asylum seekers in the northeastern city of Boliden without incident, police said.
"We are now in a very intense stage of the investigation and we are still very interested in his activities and people he met with since arriving in Sweden," said Mark Vadasz, a spokesperson for Sapo, the Swedish security service. Sweden has been on high alert since 129 people died in a wave of attacks in Paris on Friday that were claimed by the Islamic State jihadist group.
Authorities had issued an arrest warrant for 25-year-old Majid, who local media said was suspected to have fought in Syria, for preparing a "terrorist" attack.
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While no link with the Paris killers had yet been determined, Sapo has said the bloodshed in the French capital demonstrated how the Islamic State group has expanded its reach in Europe.
Sweden kept its national terror threat status on "high" after the arrest, the second-highest level on a five-point scale, after raising it Wednesday following a review by the National Centre for Terrorist Threat Assessment.
Sweden has not seen an Islamist attack since 2010, when a man blew himself up on a shopping street in Stockholm, injuring two people.