The attack happened at Forbury Gardens at about 19:00 BST where several people were stabbed.
Police are not currently treating the incident as terror-related, but counter terrorism officers were called.
Security sources have told the BBC a man arrested at the scene is thought to be Libyan.
Home affairs correspondent Daniel Sandford said he had been told the man had previously been in prison in the UK for a relatively minor conviction, not a terrorism offence.
It is not being treated as terror-related, say police, after a man is arrested on suspicion of murder.