The Spectrum rocket, developed by German start-up Isar Aerospace, started smoking from its sides, then crashed back to Earth with a powerful explosion just after launching from Norway's Andoya Spaceport in the Arctic, in live video broadcast on YouTube.
Orbital rockets are designed to place loads such as satellites into or beyond Earth's orbit.
Spectrum's blast-off was the first of an orbital launch vehicle from the European continent, excluding Russia, and Europe's first financed almost exclusively by the private sector.
The launch had been repeatedly postponed due to weather conditions, and Isar Aerospace had downplayed expectations.
"Every second we fly is good, because we collect data and experience. Thirty seconds would already be a great success," said Daniel Metzler, the company's co-founder and chief executive, ahead of the launch.
"We do not expect to reach orbit with this test. In fact, no company has yet managed to put its first orbital launch vehicle into orbit."
The 28-metre (92-foot), two-stage rocket was not carrying any load for the test flight.
A first European orbital launch attempt was made in 2023 by billionaire entrepreneur Richard Branson's Virgin Orbit.
It attempted to use a Boeing 747 to launch a rocket into orbit from southwest England, but failed, leading the company to fold.
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