Army Technical Officers had been tasked to an alert at the back of Boots the chemist in Fountain Street.
Police said a suspicious object that was found was an elaborate hoax.
Part of Fountain Street was cordoned off, but has now reopened.
The alert caused disruption to Friday night licensed premises in the area.
Police are already on their guard over fears violent dissident republicans are planning to step up their bomb attacks.
Intelligence reports suggest hoax alerts are designed to test the response times of police and ATO.