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A man has been found decapitated at a gas factory near Lyon in France, after an attack President Francois Hollande said bore the hallmarks of terrorism.
A car was rammed into the factory on Friday morning causing a number of explosions that injured two people.
Within hours a man was arrested who officials said had been investigated over possible ties to radical Islam.
French media report the suspect was an employee of the decapitated man, who owned a local delivery company.
His delivery firm made regular trips to the factory, which is owned by the US-based company Air Products, Dauphine Libere newspaper reports.
Few details of the killing have been released, but the man’s head was reportedly found on a post at the factory, in Saint-Quentin-Fallavier, some 40km (25 miles) from Lyon.
Mr Hollande said the decapitated body had “inscriptions” on it. The French interior minister said: “A flag with Arabic writing on it was found at the scene.”
France immediately launched a terror investigation as news of the attack emerged.
At a press conference soon after the incident, Mr Hollande confirmed that two attackers had targeted the chemicals factory at around 10:00 local time (08:00 GMT).
“We have no doubt that the attack was to blow up the building. It bears the hallmarks of a terrorist attack,” he said.
One of those arrested within hours of the attack was a man officials named as Yacine Sali, 35.
The suspect’s partner spoke to Europe 1 earlier on Friday and expressed shock at the news of his arrest, saying he had left for his delivery job as normal and did not come home. She has since been taken into custody.
Another suspect who believed to have been driving back and forth past the factory before the attack was also arrested, local media reported.
Air Products makes gases and chemicals for a wide range of industries, including technology, energy, healthcare, food. It is based in the US, but has more than 20,000 employees in 50 countries around the world.
“Our priority at this stage is to take care of our employees, who have been evacuated from the site and all accounted for.”
Prime Minister Manuel Valls ordered security to be stepped up at sensitive sites around Lyon.
Mr Hollande, who left the EU summit in Brussels early to return to France, made reference to the attacks on Charlie Hebdo magazine and a Jewish supermarket in and around Paris in January that killed 17 people.
“We all remember what happened before in our country. There is therefore a lot of emotion,” he said.