A decapitated body covered in Arabic writing was found at a US gas company in southeast France on Friday, police sources and French media said, after an assailant rammed a car into the premises, triggering an explosion.
The attacker survived the blast and was arrested. The identity of the beheaded victim was not clear but French media said it was a manager of a local transport company, on the site for a delivery.
Speaking from a European Union summit in Brussels, French President Francois Hollande described it as a terrorist attack and said all measures would be taken to stop any future strikes on a country still reeling from Islamist assaults in January.
Interior Minister Bernard Cazeneuve said one suspect, named as Yassin Sahli, had been arrested, and police were holding other suspected accomplices. He said Sahli did not have a criminal record but had been under surveillance from 2006 to 2008 on suspicion of having become radicalized.
"Two individuals deliberately rammed a car into the gas containers to trigger an explosion," a police source said of the attack in an industrial zone by the town of Saint-Quentin Fallavier, 30 km (20 miles) southeast of Lyon.
However the number of assailants was thrown into doubt, with Hollande saying it could have been either one or two.
French media said Sahli was a 35-year-old professional driver who lived in the Lyon suburbs. There was no official confirmation of that.
It was not known whether the victim, so far the only known fatality in the incident that also injured two people, was decapitated before or after the car smashed into the building, or whether the victim had been on site at the time of the attack, or killed elsewhere.
"The attack was of a terrorist nature since a body was discovered, decapitated and with inscriptions," Hollande told the news conference.
