1 decapitated in suspected terror attack on French factory

A suspected Islamist attacker pinned a decapitated head covered with Arabic writing to the gates of a gas factory in eastern France on Friday before being arrested, police said.

The suspect entered the factory in Saint-Quentin-Fallavier, near Grenoble, and set off several small explosive devices, the source said.

Police said it was unclear whether the attacker was acting alone, or had accomplices.

"According to the initial findings of the enquiry, one or several individuals on board a vehicle, drove into the factory. An explosion then took place," said one of the sources.

"The decapitated body of a person was found nearby the factory but we do not yet know whether the body was transported to the place or not," added this source, adding that a "flag with Arabic writing on it was found at the scene."

A man thought to be the person who carried out the attack has been arrested, according to sources close to the enquiry, who said he was known to the security services.

Interior Minister Bernard Cazeneuve said he would go "immediately" to the scene, his office said.

Prime Minister Manuel Valls ordered increased security measures at all sensitive sites in the area.

The attack, which occurred around 10:00 am local time (0800 GMT), according to local media, came nearly six months after the Islamist attacks in and around Paris that killed 17 people in January that started with a shooting at satirical magazine Charlie Hebdo.

Two Islamist brothers attacked the satirical magazine, killing 12. A policewoman and four hostages in a Jewish supermarket were also killed during the three-day attacks.

The January attacks drew record crowds onto the streets of Paris in a historic "march against terrorism".

Nearly four million people marched through the streets of France and more than 1.5 million in the French capital along with dozens of world leaders to express defiance in the wake of the attacks.

France has a high proportion of people that have gone to fight alongside Islamists in Iraq and Syria and has been on alert for possible attacks on its soil since the Charlie Hebdo attacks.

Earlier this week, the country passed a controversial new spying law granting sweeping powers to snoop on citizens.

The new French law allows authorities to spy on the digital and mobile communications of anyone linked to a "terrorist" inquiry without prior authorisation from a judge, and forces Internet service providers and phone companies to give up data upon request.

Intelligence services will have the right to place cameras and recording devices in private dwellings and install "keylogger" devices that record every key stroke on a targeted computer in real time.