"As security surrounded the man and was set to arrest and control him, an explosive device in his possession went off," the ministry said.

The blast in the crowded Darb al-Ahmar district in downtown Cairo also killed the bomber and injured three other policemen.

The man was being pursued as part of "efforts to search for the perpetrator" responsible for planting an explosive device near security staff close to a mosque in Giza on Friday, the ministry said.

Security had been able to defuse that device, the ministry said.

Monday's explosion took place near Al Azhar mosque at the heart of ancient Islamic Cairo, damaging several shops.

The site was cordoned off and reporters were not immediately allowed access to the area. 

"My shop's front and windows were destroyed," said Kareem Sayed Awad, a barbershop owner. "Not only that, but people have died. This is a tourist area and such incidents affect it."

Egypt's tourism industry has been struggling to recover from attacks and domestic instability that has hit the country in the years following a 2011 uprising that toppled longtime ruler Hosni Mubarak.

In December three Vietnamese tourists and their Egyptian guide died when a homemade bomb exploded on their bus on the outskirts of Cairo, near the famed pyramids in Giza.  

Authorities have been seeking to lure tourists back by touting new archaeological discoveries and bolstering security around archaeological sites and in airports.

Tourism has slowly started picking up. The official statistics agency says tourist arrivals in Egypt in 2017 reached 8.3 million, up from 5.3 million the year before. 

But that figure was still far short of the record influx in 2010 when over 14 million visitors flocked to the country.

Egypt has also for years been battling an Islamist insurgency, which deepened following military's ousting of Islamist president Mohamed Morsi in 2013.

The attacks have been mainly concentrated in the restive northern Sinai Peninsula but have also spread to the mainland. 

In February 2018, security forces launched a major anti-militant operation focused on the Sinai Peninsula, aimed at wiping out a local affiliate of the Islamic State group.

On Saturday, an attack on an Egyptian army checkpoint in north Sinai left 15 soldiers dead or wounded and seven of the suspected jihadist assailants killed, according to the military.