Two sharks, reportedly more than three metres in length, were spotted near Bar Beach on Friday morning with swimmers and surfers fleeing the water when the alarm was raised.
With Australia Day crowds building and a surf contest under way, the sightings caused the closure of the beach for around 90 minutes.
Bar Reef Boardriders Australia Day Classic contest director Ted Bassingthwaighte said the incident caused significant delays.
"It happened about 9.30, a shark was sighted by the surf life saving club about 400m north, off Susan Gilmour beach," Mr Bassingthwaighte said.
"They responded immediately and then the beach was closed.
"Newcastle [council] lifeguard supervisor Paul Bernard came on a jet ski and they did two or three sweeps for about an hour.
"They thought they might have sighted it again after about an hour, but that wasn't confirmed and then after an hour-and-a-half the beach was opened and we could surf again."
Mr Bassingthwaighte said lifeguards had told him there could have been two large sharks in the water, believed to be in excess of 3 metres in length.
The surf contest returned to action after the 90-minute delay and was continuing into Friday afternoon.
Newcastle City Council have been approached for comment.
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