Twin blasts from the Calbuco volcano in southern Chile have sent vast clouds of ash into the sky, increasing concerns that it could contaminate water, cause respiratory illnesses and ground more flights.

The volcano erupted Wednesday afternoon for the first time in more than four decades, sending a towering plume of ash more than 10 kilometres into the air. Emergency officials were taken by surprise and had only a few minutes to issue an alert.

Calbuco had another spectacular outburst early Thursday, with lightning crackling through a dark sky lit orangish red by the explosion.

As the ash cloud spread, "people went into a state of panic," said Miguel Silva Diaz, 28, an engineer who lives in Puerto Montt, a city about 22 kilometres from the volcano.

"Then, at around 1 a.m., I heard a loud noise, as if somebody had detonated an atomic bomb."

No injuries were reported, and the only missing person since the eruption was found on Thursday. Authorities evacuated 4,000 people from the region as gas and ash continued to spew, and they closed access to the area around the volcano, which lies 1,000 kilometres south of the capital, Santiago, near the popular tourist towns Puerto Varas and Puerto Montt.

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The Calbuco volcano is about 1,000 km south of the Chilean capital, Santiago, and near the tourist towns of Puerto Varas and Puerto Montt. (The Canadian Press)

Flights from Puerto Montt and Bariloche in neighbouring Argentina were cancelled — both are popular tourist destinations for locals and foreigners.

Volcanic ash can damage aircraft and makes flying dangerous. In 2011, the eruption of Chilean volcano Puyehue sent ash high into the atmosphere, leading to the cancellation of flights as far away as Australia.

Wednesday's eruption, which began around 6 p.m. local time, took residents by surprise.

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A vehicle travels along a road at Pucon city in southern Chile. Ash was blown as far as neighbouring Argentina and forced cancellations of flights in both countries. (Cristobal Saavedra/Reuters)

"I was shocked. I had just arrived home when I looked through the window and saw the column of smoke rising up," said Daniel Palma, 30, a psychologist who lives in Puerto Varas. "We called our families, posted photos."

Palma says many residents are concerned about the possible effects of the ash on their health.

"We woke up today with a blanket of fog, and it hasn't cleared. We have a layer of smoke above us," he said.

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A day after the eruption, the clean-up began, but residents of Ensenada, above, and other towns were still on alert as vash continued to. be blown across the region. (Ivan Alvarado/Reuters)

President Michelle Bachelet declared a state of emergency, saying the eruption of Calbuco is "more serious and unpredictable" than the one last month at the Villarica volcano, which also forced the evacuation of thousands.

Ash continued to fall Thursday in Puerto Montt and other nearby cities, said 30-year-old Patricio Vera, the director of a local radio station. Varas said that after the eruption, hundreds of people rushed to get gas, forcing stations to ration sales, while supermarkets closed early to avoid the risk of looting.

The 2,000-metre Calbuco last erupted in 1972 and is considered one of the top three most potentially dangerous among Chile's 90 active volcanoes. The last major eruption was in 1961.

LATAM airlines cancelled flights to and from Puerto Montt because airborne ash can severely damage jet engines.

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Some residents are concerned the large amount of ash, combined with the smoke and fog hanging over the region, could cause health problems. (Ivan Alvarado/Reuters)

In 2011, a volcano in the Caulle Cordon of southern Chile erupted violently, forcing the cancellation of hundreds of flights and the evacuation of more than 3,500 people. Stiff winds blew ash, and the thick abrasive soot coated slopes in the sky resort city of San Carlos de Bariloche, over the border in Argentina.

By Thursday afternoon, much ash had made its way to Villa La Angostura, Argentina, a small town about 90 kilometres northeast of the volcano. Cars and streets were coated with a thin layer of ash, but people were otherwise going about their business.

"We are praying that the volcanic activity will be as short as possible," said mayor Roberto Cacault.

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