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French special Police forces escort a woman from a residential building during a raid in Saint-Priest, near Lyon, France, June 26, 2015. Image Credit: Reuters

LYON, France: French authorities are questioning a 35-year-old delivery man of North African origin suspected of a macabre attack involving the beheading of his boss and an attempt to blow up a US-owned chemicals plant in south-eastern France.

President Francois Hollande, dealing with new security fears less than six months after 17 were killed by Islamist gunmen at satirical weekly Charlie Hebdo and a Jewish food store in Paris, said the incident clearly amounted to a terrorist attack.

Yassim Salhi is suspected of having rammed his delivery van into a warehouse of gas containers, triggering an initial explosion. He was arrested minutes later while opening canisters containing flammable chemicals, prosecutors said on Friday Police later found the head of the victim, the 54-year-old manager of the transport firm that employed the suspect, dangling from a fence at the site, framed by flags with written references to Islam.

Salhi, his wife, sister and a fourth person were being held for questioning over the weekend. Salhi was known to French authorities as a potential risk because he visited Islamists but there has been no claim of responsibility for the attack.

While an anti-terrorist inquiry has been launched, Paris public prosecutor Francois Molins cautioned against premature conclusions and said investigators had yet to fully understand what happened at the industrial zone in Saint Quentin-Fallavier, 30 km (20 miles) south of the city of Lyon.

"Questions remain over the exact chronology of events, what happened when he arrived, the circumstances of the decapitation, the motivation and whether there were accomplices," he said.