Update: At least 23 dead in suspected arson at Japan animation studio

An aerial view shows firefighters battling fires at Kyoto Animation. (Reuters)

Twenty three people have died and dozens have been injured in a suspected arson at an animation studio in Japan, reports say.

Police have arrested a man who allegedly poured an accelerant - thought to be fuel -  around the three-storey anime studio in Kyoto, according to NHK .

"A man threw a liquid and set fire to it," a Kyoto police spokesman told news agency AFP.

The suspect, believed to be 41-years-old, is one of nearly 40 people injured in the blaze, which started at roughly 10.30am local time.

Pictures show smoke and flames pouring out of the windows.

Police also found knives at the scene, say local media.

Detectives are treating the case as an arson and the arrested man has already admitted to starting the fire, the Mainichi Shimbun newspaper reports.

Prime Minister Shinzo Abe said the incident was 'too appalling for words'.

The newspaper states that roughly 20 people thought to be inside the Kyoto Animation building are missing.

Residents told reporters that they heard an explosion in the studio and then saw the fire.

A man working nearby told NHK he was in his office when an explosion went off at around 10.30am.

He told the broadcaster that he went outside and saw flames and smoke coming from the top two floors of the three-storey studio.

Kyodo News reports that one local saw bloody footprints and a person with singed hair lying down at the scene.

Kyoto Animation, known as KyoAni, makes popular television shows and also publishes anime books.

It is understood that around 70 workers were in the studio at the time of the fire.  

Up to 30 fire engines have been sent to the scene to tackle the blaze.

The injured suspect is receiving treatment in hospital, according to NHK.