* Newswire reports two dead, nearby buildings damaged
* Collapse comes months after restaurant explosion
* City to host 2014 World Cup, Olympics in 2016
* Rio struggles to address infrastructure concerns
By Pedro Fonseca and Rodrigo Viga Gaier
RIO DE JANEIRO, Jan 25 (Reuters) - A building collapsed in downtown Rio de Janeiro late on Wednesday, according to local media, in the latest incident highlighting the failure of authorities to improve the city's infrastructure amid preparations to host soccer's World Cup and the Olympics.
Newswire Agencia Estado reported at least two fatalities in the collapse of the building, reportedly 18 storys high, and said that two other buildings nearby had partially collapsed.
A loud explosion preceded the collapse, leaving the surrounding area covered in debris and dust, TV Globo reported. Police and emergency authorities said there were casualties, but that no official count had been released.
As many as 11 people could be trapped amid the wreckage, cable broadcaster GloboNews said. It said city authorities were assessing the risk of collapse of an adjoining building that had been badly damaged.
"I ran down the stairs desperate to escape. Just when I left the building it collapsed. I escaped by the skin of my teeth - it's the work of God," Nelson Gomes, 38, an air conditioning technician, told iG newswire.
Gomes, who was on the 10th floor, said he rushed to the stairwell after hearing a "huge noise."
TV images showed cars covered with concrete and steel rods. Light, the electricity distribution company serving Rio de Janeiro, cut power to the area to avert the possibility of fires after a strong smell of gas was detected, both TV broadcasters said.
Rio de Janeiro is struggling to address concerns over poor infrastructure as it prepares to co-host the soccer World Cup in 2014 and the Olympic Games two years later.
The incident comes months after an explosion apparently caused by a gas leak ripped through a restaurant in downtown Rio, killing three people and igniting concerns over the state of the city's infrastructure.
In recent months, Rio inhabitants have had to deal with unexpected explosions of sewer lines and landslides in some city slums caused by heavy rain and deforestation.
The building, which housed a bakery and an Itau Unibanco Holding bank branch, was located near the headquarters of state-controlled companies including oil producer Petrobras and development bank BNDES .
Traffic in the area and service in neighboring subway stations have been suspended, both channels reported. (Writing By Asher Levine and Guillermo Parra-Bernal; Editing by Eric Walsh)