The attack took place around noon on Saint-Lambert square, home to the town's courthouse and located near a busy Christmas market, Belga news agency said.
A two-year-old child is reportedly fighting for life in hospital. Six other victims are said to be gravely injured.
One of two or more assailants threw stun grenades into the courthouse while another was hurled at a bus shelter, RTL-TV1 said.
Shots were fired across the square by gunmen posted on the rooftop of a bakery shop, with further shots heard later from across town.
Police cordoned off the square and gave chase to the assailants, one of whom was reportedly killed. The gunmen are thought to be hiding in Liege cathedral.
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