French police interrogate attack suspect after grisly decapitation

Speaking in Brussels after cutting short an EU summit, French President Francois Hollande labelled the factory beheading "a terrorist attack."

- 'Normal family life' -

Salhi had been known to security services for a number of years but did not have a criminal record, Interior Minister Bernard Cazeneuve said.

The married father-of-three had been investigated for links to radical Salafists in Lyon, but was not identified as having participated in terrorist activities.

A co-worker described him as "a wolf in sheep's clothing" to RTL radio, adding that Salhi had spoken to him about Islamic State -- "not to try recruit me for anything but simply to ask my opinion".

Molins said Salhi's wife, sister and another man had also been taken into custody.

The second man is being investigated on terrorism-related charges but his link to the attack is not clear, and Molins said there was no indication that Salhi had an accomplice with him during the assault.

A woman identified as Salhi's wife told French radio: "On the news they are saying that it's a terrorist attack, but that's impossible. I know him, he's my husband. We have a normal family life."

The boss of Air Products, the US firm that owned the factory, said he was "horrified and saddened" by the attack.

Hollande ordered security tightened to the highest possible level in the region.

For months, Europe has been on high alert for so-called "lone wolf" attacks by supporters of Islamic State, which has urged its followers to strike wherever they can.

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

The country has been on edge since January 7 when two Islamist brothers attacked Charlie Hebdo, killing 12 people.

A policewoman and four hostages in a Jewish supermarket were killed by another jihadist Amedy Coulibaly, in three days of attacks which ended in dramatic police raids which left the three Islamists dead.

The unprecedented attack on French soil brought nearly four million people, including dozens of world leaders, onto the streets of France in a historic "march against terrorism".