[UPDATE 2: I just heard that space guy James Oberg will be on the last segment of Rachel Madddow's show on MSNBC tonight to talk about this!]
[UPDATE 1: See bottom of post; I knew it!]
My first reaction when I saw that was, "What the FRAK is THAT?!" My second thought was, "Photoshop". But then I saw lots of pictures of this on a bunch of different Norwegian media, so I don't think it's a digital hoax. Then videos started surfacing, like this one, which clearly show the spiral spinning. It's not just a static picture, whatever this thing was; it was really in the sky. However, after a moment, I realized this must be a rocket, most likely spiraling out of control. I don't understand all the details -- I don't have all the info yet -- but a rocket fits what we're seeing here. First, this was seen all over Norway, so it must have been at a high altitude to be so visible. Second, the blue spiral angling down to the right is clearly due to perspective. A rocket spiraling around, and coming up from the lower right, would appear to make tight spirals when it was far away and bigger ones as it got closer. Third, you can actually see the bright white spiral spinning in the videos. That threw me for a second, to be honest, but after a moment I figured that it makes sense if the rocket is headed more or less straight toward the camera. Whatever it is being lit up (exhaust, or a leaking payload?) would appear to expand in a spiral like water from a spinning sprinklerhead. The spiral itself is not spinning any more than water from the sprinkler is; that's an illusion of motion.
Fourth, after a few moments, a black disk appears to expand in the center of the white spiral, as seen in this picture (it's a little fuzzy; you can see the person taking it must have used a long exposure because foreground lights are jittery, but you get the idea). That's exactly what I would expect if whatever is being ejected by the rocket ran out; the arms of the spiral would expand away from the center, leaving black emptiness in the middle. So that's my hypothesis. A rocket got out of control, perhaps losing a stabilizer, and started to spiral. The two spirals, different in shape, size, and color, indicate something happened in the middle of all this (the rocket second stage fired while still spinning, or something else started leaking out), changing the rocket's direction. Then, when the fuel or whatever ran out, the white spiral began to disappear from the inside out as the material expanded in space. So who launched it? The Russians are a likely guess, but --shocker -- they're denying it. I'd love to know and find out what the details are, but whoever shot it up and whatever the purpose, I'm pretty sure what we're seeing here is a rocket launch that didn't go exactly according to plan. Note: there are a lot of stories online about this with more very cool pictures: The Sun and The Daily Mail have it in English, while Norwegian media include VG Nett, Altaposten.no, NRK.no, Framtidinord.no, Nordlis.no, and amazing videos can be seen here and here. UPDATE: From Doctor Atlantis I heard of this video which simulates particles being spewed out from a spinning rocket booster. Look familiar? Photos: Jan Petter Jørgensen and Morten Kristiansen. Tip o' the payload bay to the many folks who alerted me to this story!