Madrid regional governor Francisco Javier Ansuategui said two suspected ETA members who were arrested on Tuesday had stashed nearly 440 pounds of explosives, along with detonators, automatic weapons and false license plates an apartment in the center of the capital.
"It was a real arsenal," Ansuategui told a news conference with the heads of the National Police and Civil Guard.
"These two persons didn't want to scare," he said. "They wanted to kill and to kill with all its consequences" during the summit of more than 40 leaders from Europe, Latin America and the Caribbean that begins Friday.
Ansuategui said the explosives were found in an apartment on Piamonte Street, near the National and Supreme Courts. Another 40-kilogram (88-pound) charge was discovered in the outskirts of the capital in a stolen car linked to the detainees.
The official conceded that a third person involved in the preparations had escaped arrest and vowed that Spanish law enforcement authorities "will not rest until they detain this person and all those who have participated in the activities of this command."
The attack attempt would suggest an important shift of tactics for the group, which has targeted mostly Spanish police and government figures during its 33-year campaign of shootings and bombings.
ETA — classified as a terrorist group by Spain, the EU, and the United States — has been fighting since the late 1960s to carve an independent Basque state out of lands straddling northern Spain and southwest France. Its campaign of bombings and shootings has left more than 800 people dead.
ETA has been faced lately with tough crackdowns by Spanish police with the help of French colleagues across the border.
During the two-day summit, 33 leaders from Latin America and the Caribbean are expected to ask for increased aid and trade to help them overcome political instability and economic difficulties in their region.
The Madrid municipality has said more than 1,000 police will patrol the capital to provide security.
On Wednesday, Guatemalan President Alfonso Portillo was the first of the leaders to meet in Madrid with Spanish Prime Minister Jose Maria Aznar, whose country holds the EU presidency.
Earlier, police in the Basque region detained six people accused of collaborating with ETA in a second day of crackdowns against the group.