A French Gendarme blocks the access road to the Saint-Quentin-Fallavier industrial area, near Lyon, France, June 26, 2015.[Photo/Agencies]

SAINT-QUENTIN FALLAVIER, France - A severed head covered in Arabic writing was found at a US gas company in southeast France on Friday, police sources and French media said, after two assailants rammed a car into the premises, exploding gas containers.

Speaking from a European Union summit in Brussels, French President Francois Hollande described it at a terrorist attack and said all measures would be taken to stop any future attacks on a country still reeling from Islamist assaults in January.

One suspect had been arrested and was already known to French intelligence sources, Hollande said.

The suspect did not have a criminal record but had been under watch as being possibly radicalised, Interior Minister Bernard Cazeneuve said.

"This person was the subject of an "S" ("security") file for radicalisation in 2006, which wasn't renewed in 2008. He didn't have a criminal record," Cazeneuve told journalists at the scene of the attack. He added that police had detained other possible accomplices.

"Two individuals deliberately rammed a car into the gas containers to trigger an explosion," a police source said.

It was not known whether the victim, so far the only known fatality in the incident that also injured two people, was decapitated before or after the car smashed into the building, or whether the victim had been on site at the time of the attack, or killed elsewhere.

"The attack was of a terrorist nature since a body was discovered, decapitated and with inscriptions," Hollande told the news conference.