"The searches were carried out as part of an investigation into an operational cell some of whose members had returned from Syria," said prosecutors' spokesman Eric Van Der Sypt. "For the time being, there is no connection with the attacks in Paris."
Describing events in the quiet provincial town just after dark, he said: "The suspects immediately and for several minutes opened fire with military weaponry and handguns on the special units of the federal police before they were neutralized."
Read MoreCan cash-strapped Europe prevent terrorism surge?
Earlier in the day, in an apparently unrelated development, police detained a man in southern Belgium whom they suspected of supplying weaponry to Amedy Coulibaly, killer of four people at a Paris Jewish grocery after the Charlie Hebdo attack.
With half a million Muslims, mostly of French-speaking North African descent, among its 11 million people, Belgium has seen similar discontent to that in France among young, unemployed children of immigrants in blighted, post-industrial towns like Verviers, once a major center for wool and other textile mills.
A young Frenchman of Algerian origin is facing trial in Belgium, accused of shooting dead four people at the Jewish Museum in the capital Brussels last May.
Per head of population, more Belgians have taken part in the fighting in Syria than any other European state. The Belgian government believes about 100 of its nationals have come back with combat experience. A further 40 may have been killed and about 170 are still in the ranks of fighters in Syria and Iraq.
Public television RTBF showed video from Verviers of a building at night lit up by flames, with the sound of shots being fired. Late into the evening, police commandos were controlling some streets and checking other sites. Crime scene investigators were at work.
Emrick Bertholet was outside a pharmacy shortly before 6 p.m. (12.00 noon EST) when police vehicles roared up and armed commandos leapt out: "They shouted 'Let's go', they ran off and everything happened really quickly," he told Reuters.
"I heard the sound of grenades, bursts of gunfire ... I'm a bit shocked, a bit afraid, surprised it could happen here."
Belgium has taken a lead in EU efforts to counter the threat perceived from the return of "foreign fighters" from Syria. It is also part of the U.S.-led coalition fighting Islamic State. Six Belgian F-16s have taken part in bombing Syria and Iraq.
A court in Antwerp is due to deliver its verdict on 46 people accused of recruiting young men to join jihadists or of becoming jihadists in Syria, Belgium's largest Islamist militant trial to date. The court was to have given its verdict this week, but it was delayed for a month after the Paris violence.
In Germany, police arrested a suspected supporter of Islamic State who had recently been in Syria, prosecutors said on Thursday.