A spokesman said the death toll was likely to rise given the large number of families living in the area.
The festive lights and Christmas tree that normally decorate Manger Square were missing, as were the throngs of foreign tourists.
The suspect fled the scene and left behind the firearm, Balken said.
The Russian military made no mention of the incident.
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The embassy cited its inability to function normally or fulfill its missions under the current circumstances.
The US has expressed support for the UN's latest draft resolution on humanitarian aid for Gaza.
He is accused of punching an 82-year-old woman at least three times in the head while operating on her eyes.
Footage shared on social media captured people escaping from exterior ledges.