One person has been beheaded and at least two others injured, since suspected terrorists rammed a car into a U.S.-owned factory near Lyon, south East France.
A suspect known to security forces has already been detained when he was tackled by a local firefighter, French interior minister Bernard Cazeneuve, told reporters at the site.
There were also media reports of the decapitated head being found covered in Arabic writing, on the site of the gas plant of U.S. industrial group Air Products. Reuters also cited police sources saying a flag bearing Islamist inscriptions was found at the site.
Cazeneuve said one suspect, 35-year-old Yassin Sahli, had been arrested, according to Reuters.
Air Products has confirmed the attack took place in its facility in L'Isle-d'Abeau, which is around 19 miles from the city of Lyon.
"Emergency services are on site and have contained the situation. All individuals working at the site have been evacuated. The site is secure. Our crisis and emergency response teams have been activated and are working closely with all relevant authorities," the international company said in a statement on its website.
If the incident at the factory is confirmed as a terrorist incident, it would make it the second such attack on French soil this year, following the attack on the Paris offices of French satirical magazine Charlie Hebdo and a Jewish supermarket that saw 17 people killed this January.
Speaking just before he left the European Union leaders' summit in Brussels to return to Paris, President Francois Hollande told reporters that the attack on the factory was of a "terrorist nature", adding that one person had been found dead, with two others injured.
Hollande left the summit early to hold a defense cabinet meeting on Friday afternoon.
The president said, in translated remarks, that France should not "give up to fear" following the attack and emphasized the need to "eradicate" the groups responsible.
Security forces had been deployed to step up the security in the region to avoid all further attacks, the president told reporters.
Air Products, which is headquartered in Allentown, Pennsylvania, and specializes in industrial and medical gases said it had increased security at locations around the world as a precautionary measure.
French prosecutors have opened investigations into one murder and one attempted murder connected with the attack on the factory.
—With contribution from CNBC's Katy Barnato.