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Previously unknown artworks by masters including Marc Chagall, Otto Dix, Max Liebermann and Henri Matisse are among those found inside a flat in Munich.
Prosecutors said the issue of ownership was still to be clarified. The total value has been estimated at about €1billion (£846 million).
Other artists whose works were found include Pablo Picasso and Henri de Toulouse-Lautrec, as well as Canaletto and Gustave Courbet.
Fifteen works out of a huge collection of modern masterpieces snatched by the Nazis in the second World War have turned up in Munich.
They were thought to have been lost to the world with the bombing of Dresden blamed for destroying them.
And as Neil Connery reports, they are worth hundreds of millions of pounds:
The vast trove of modern art seized under Germany's Nazi regime, including works by Picasso, Matisse and Chagall, was discovered in a Munich apartment among stacks of rotting groceries, German magazine Focus reported.
Customs investigators made the find in 2011 after a 76-year-old man travelling by train from Zurich to Munich aroused suspicion at the border when he was found carrying a large, albeit legal, amount of cash.
Focus said Cornelius Gurlitt, a recluse, had funded himself by occasionally selling a painting.
Commenting on the discovery of a collection of around 1,500 artworks looted by the Nazis in Munich, a customs official is quoted in the Daily Mail as saying:
German art historian Meike Hoffmann has been trying to establish the origin and value of around 1,500 artworks found in Munich that were looted by the Nazis in the 1930's and 1940's.
One of the works was reported to be a Matisse painting previously owned by Jewish collector Paul Rosenberg.
His granddaughter Anne Sinclair, the French journalist and ex-wife of the former head of the International Monetary Fund Dominique Strauss Kahn has been campaigning for many years for the return of looted art.
At least 200 of 1,500 artworks discovered in Germany that were confiscated by the Nazis in the 1930s and 1940 are the subject of international warrants, news magazine Focus reports.
The collection is reported to include artworks by master painters such as Picasso, Chagall and Matisse with an estimated value of about one billion euros (£846m).
The works are being held in a secure warehouse in Munich at present while art historians attempt to determine the origin and value of the images.
A collection of approximately 1,500 paintings confiscated by the Nazis in the 1930s and 1940s has been found in Munich, German magazine focus reports.
It is said to include artworks by master painters such as Picasso, Chagall and Matisse with an estimated value of about one billion euros (£846m).
Some of the works were declared as "degenerate" by the Nazis during the Third Reich, others were stolen from or sold by Jewish art collectors involuntarily.
Focus said the collection was found in 2011 when the tax authorities investigating the reclusive son of an art dealer in Munich obtained a search warrant for his home.