Police in Serbia and Bosnia carried out raids on suspected radical Islamists on Saturday after a gunman opened fire with an assault rifle on the U.S. embassy in the Bosnian capital Sarajevo.

Serbian police arrested and later released 17 people in three locations in the southwest of the country, including the mainly Muslim Novi Pazar, the hometown of the gunman identified as 23-year-old Mevludin Jasarevic.

Friday's attack in broad daylight paralysed central Sarajevo and saw shopkeepers scrambling for cover as the gunman paced up and down firing on the embassy before a police sharpshooter wounded him and he was arrested.

One police officer was also wounded and several bullets struck the wall of the embassy compound in an attack that threw a fresh spotlight on the threat from radical Islam in the Balkans.

Serbian Interior Minister Ivica Dacic said the raids had targeted the extremist Islamic Wahhabi movement in the southwest of Serbia, a mainly Orthodox Christian country. Wahhabism is a strict branch of Islam.

Police seized computers, compact discs, military uniforms, knives, baseball bats and a sword, the Interior Ministry said in a statement.

Bosnia's security minister, Sadik Ahmetovic, said Bosnian authorities coordinated activities with their Serbian counterparts.

Several locations have been raided and a number of individuals believed to have had links with the perpetrator have been interrogated in Bosnia, Ahmetovic told reporters.

FBI INVESTIGATION

The state prosecutor Dubravko Campara said he had met the gunman but could not provide more detail on his motives in the interest of ongoing investigation.

Serbian media reported police had stepped up security around the United States embassy in the capital Belgrade.

U.S. Ambassador to Bosnia Patrick Moon said Federal Bureau of Investigation (FBI) agents were expected to conduct an investigation into the damage on the embassy building.

This is a standard procedure if there is a damage to our property or personnel, he said.

Security officials in Bosnia said Jasarevic, who was convicted of robbery in Austria in 2005 and deported to Serbia, had entered Bosnia on Friday morning. He visited hardline Islamists in northern Bosnia earlier in the year.

The Novi Pazar region has been raided previously.

In 2007, police uncovered what they said was an Islamist terrorist training camp, seizing plastic explosives, grenades and automatic weapons.

In 2010, Bosnian police also raided the northern village of Gornja Maoca which is home to followers of the Islamic Wahhabi branch. They arrested several men, suspected of destabilising Bosnia and seized a large cache of weapons.

The villagers there live in accordance with Sharia (Islamic law). Many young Bosnian Muslims, particularly from rural areas, have in recent years adhered to the puritanical Wahhabi sect under the influence of foreign fighters, most of whom left Bosnia after the 1992-95 war.

(Additional reporting by Aleksandar Vasovic in Belgrade and Maja Zuvela in Sarajevo; Editing by Karolina Tagaris)