An attacker with suspected ties to French Islamic radicals has rammed a car into a gas factory in France, and the severed head of a local businessman was hung from a post at the entrance, officials said.
Two more people were injured in the attack in Saint-Quentin-Fallavier, south-east of Lyon, authorities said.
President Francois Hollande, speaking in Brussels, said the attack began when a car crashed through the gate of the factory and ploughed into gas canisters, touching off an explosion.
“No doubt about the intention – to cause an explosion,” Mr Hollande said, calling the attack “of a terrorist nature”.
Interior minister Bernard Cazeneuve said a man who had been flagged in 2006 for suspected ties to extremists was seized by an alert firefighter, and was one of multiple people in custody after the attack.
A security official said the victim was the head of a local transportation company who is believed to have been killed before the explosion. His name was not released.
Authorities said his body was found near the site of the attack.
Mr Cazeneuve said: “People who could have participated in this abject crime are in custody.”
He added that the suspect was known to intelligence services who had him under surveillance from 2006 to 2008. The man is from the Lyon region, he said.
The head was found staked on a gate at the factory’s entrance, in what appeared to be an echo of the Islamic State group’s practice of beheading prisoners and displaying their heads for all to see.
An official said two flags – one white and one black, both with Arabic inscriptions – were found nearby.
France’s anti-terror prosecutor said an investigation had been opened and potential charges included plotting as part of “a terrorist group”.
Mr Hollande spoke after watching TV news reports about the attack with German chancellor Angela Merkel as both leaders attended a European Union summit in Brussels.
The industrial site belongs to Air Products, a US chemical company based in Allentown, Pennsylvania.
Air Products says all its employees are accounted but has not confirmed whether its staff were among the two people reported injured. The company said in a statement that all employees have been evacuated from the site, which is secure.
It said: “Our crisis and emergency response teams have been activated and are working closely with all relevant authorities.”
Mr Cazeneuve said the investigation has just begun and cautioned against jumping to conclusions.
France went on high alert after attacks in January against the satirical newspaper Charlie Hebdo, a kosher grocery store and a policewoman that left 20 people dead in the Paris region, including three Islamic extremist attackers.
Since then, fears of copycat attacks have risen. One person was arrested after authorities said he was plotting to target churches in the Paris region.
Mr Cazeneuve said security has been heightened at religious sites around the country.