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- One man has been killed and two others injured in a suspected Islamist attack near the city of Lyon
- Officials say one man has been arrested
- French President Francois Hollande says it was a "terrorist attack"
- The attack began with several explosions at a factory
- Security level raised in region
Live Reporting
By James Reevell, Bernadette McCague, Ayeshea Perera, Penny Spiller, Alex Kleiderman and Roland Hughes
All times stated are UK
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France terror attack: what we know
We're now coming to the end of our live page on the attack in France. Before we go, here is a reminder of what we know happened this Friday:
White House statement
The White House says US law enforcement officials are in contact with their counterparts in France following this morning's attack.
Victim 'was 50 years old'
A source close to the investigation quoted by Reuters confirms earlier reports that the dead man was the suspect's boss.
It says he was 50 years old and both he and the suspect had been due to travel together to make a delivery to the Air Products site - seen in the top right of the image above.
Spain raises alert
Spain has raised its terror alert level from medium to high after the attacks in France, Tunisia and Kuwait.
Interior Minister Jorge Fernandez Diaz said: "Considering the proximity of our country to the places where some of these attacks took place, it has been proposed to raise the anti-terrorist alert".
Security focus the same
Hugh Schofield
BBC News, Paris
The tactics adopted by France's security services are likely to remain the same despite the events in in Saint-Quentin-Fallavier.
Officials will not try to second guess the activities of potential jihadi terrorists. The focus of the troop deployment launched after the Charlie Hebdo magazine attack in Paris in January will remain on protecting targets such as Jewish institutions and certain media outlets.
Sister 'being held'
France Info radio says that Yassin Salih's sister is also now in custody.
Regional terror alert
The highest terror alert announced by French president Francois Hollande is in place for the next three days in the south-east Rhone Alpes region only, not across the whole of France.
Prosecutor to detail case
French media are reporting that an anti-terror prosecutor in Paris will give a press conference at 19:00 local time (18:00 BST), in which further details on Friday's attack will be given.
New images from the scene
France's interior ministry has just released images of the site of Friday's attack - it shows the Air Products factory in better detail than any other image so far. Also photographed are firemen who arrived first at the scene and who were called heroes by president Francois Hollande.
'Radical preacher'
The Est Republicain newspaper
goes on to say that a radical preacher was made to leave a mosque in Pontarlier that Sahli attended in the early 2000s.The preacher, named Ali, left after a failed takeover of the mosque with a group of extremist Islamists.
After that, the newspaper reports, he went to Egypt then Indonesia, where he was suspected of helping carry out a terror attack.
He is currently in Morocco.
The newspaper says its sources claim there is a strong chance of a link between Sahli and the preacher.
Suspect's background
The Est Republicain newspaper, that covers the city of Besancon and the Franche-Comte region,
says (in French) that Yassin Sahli is originally from the town of Pontarlier.Pontarlier is a small town halfway between Besancon and Lausanne in Switzerland - further north from Lyon.
The newspaper says he lived there before moving to Besancon around 10 years ago, and is of Algerian and Moroccan descent.
It claims he may have been radicalised by another man from Pontarlier who then went to Indonesia.
Hollande raises security level
The French president Francois Hollande has been speaking in Paris after a security meeting.
He praised the "extremely brave" firemen who tackled the suspect.
He said the victim - believed to the boss of the suspect - was 50 years old and he died in a "cowardly attack".
Mr Hollande said the security level would be raised to its highest point, and that thousands of police officers would be deployed across France to improve security over the coming days.
What is the S register?
A lot of the reports in France note that the suspect, believed to be 35-year-old Yassin Salhi, was on the 'S register' with the security services. So what does that mean?
The French network BFM
reports that it is the same classification given to other terror suspects, such as Mohamed Merah, who killed seven people in the Toulouse area in 2012.Merah was tracked by security services for two years - as, reportedly, was Mr Salhi. They both appeared on the S register because of suspected terror links, but, following protocol, security services stopped following them two years later after no evidence emerged of terrorist activity.
Suspect moved recently
The France Info radio station has been speaking to the suspect's neighbours.
It says he was seen as quiet, with no indications he had been radicalised.
France Info tweets that he had moved to the Lyon area seven months ago, having previously lived in the city of Besancon, further north in the Vosges area.AFP: Victim was suspect's boss
AFP reports that the victim of Friday was the boss of the suspect. They've been told that by a source close to the investigation. AP earlier said he had been killed away from the site of the factory.
Taken under cover
Here's another image of someone being taken away from the house of the suspect in Saint-Priest. AFP reports that the suspect's wife has been taken into custody.
Authorised vehicle
Jean-Paul Bonnetain, prefect of Isere region, has confirmed the vehicle used to gain access to the site had the necessary authorisation.
Meanwhile, Reuters reports that the site of the explosion would have had to implement security arrangements at the low end of the European Union regulations for zones where gases and chemicals are handled.
Three years of terror attacks
The BBC has produced
a timeline of the most recent terror attacks in France - the most notable being the attacks on the Charlie Hebdo newspaper and a Jewish supermarket in Paris in January.'A quiet family'
Le Dauphine Libere has more detail on the suspect, in French.
One neighbour in the Lyon suburb of Saint-Priest says they were "a very quiet family" with three children aged between six and nine years old.
The suspect was never seen at the mosque in Saint-Priest, another neighbour says.
First images of police raid
The first images are coming in of the police raid in the Lyon suburb of Saint-Priest, where the suspect is believed to live. AFP says the man's partner has been taken into custody.
One of the images shows a woman and a child being taken away under a blanket.
AFP: Suspect's wife held
AFP reports that the suspect's wife has been taken into police custody, according to a legal source.
'Death before explosion'
More on the identity of the dead man. A French security official has confirmed to the AP news agency that he has been identified as a local businessman. He added he was believed to have been killed away from the site.
Unanswered questions
Hugh Schofield
BBC News, Paris
Who is Yassin Salhi? How long had he planned this attack? Did he have accomplices, or contacts abroad who urged him to act? Did the intelligence services slip up by taking him off their red list in 2008?
We know that he lives in a council flat in the Lyon suburb of Saint-Priest. His neighbours describe him as unexceptional and decent.
His wife, contacted by Europe 1 radio, says he left to work this morning as normal. She says the family - they have three children - are religious in a regular kind of way. Nothing extreme.
And yet, this morning, he apparently switched from Mr Normal of Lyon to a jihadist fanatic.
His actions are straight from Islamic State. He beheaded a man, then apparently tried to blow up the factory. Was this an attempted suicide bid? If so, then that is a first in France. And an even worse portent.
US company
Air Products, the owner of the factory where the attack took place, is a US chemical company based in Allentown, Pennsylvania. Founded in 1940, it has 20,000 employees and operations in more than 50 countries. Its current chairman and chief executive is Iranian-born Seifi Ghasemi.
Emergency meeting starting
An emergency meeting of France's defence council is about to get under way at the Elysee Palace in Paris.
President Francois Hollande arrived back from Brussels just over an hour ago and will chair the meeting.
Search at suspect's house
Le Dauphine Libere newspaper
says that an operation is under way in the village of Saint-Priest, where the suspect is believed to live.It says he lived there for the last six months with his partner and their three children.
Factory cordoned off
Police officers have cordoned off the area outside the factory and are standing guard as investigations take place.
Hollande arrives at Elysee
French President Francois Hollande has arrived at the Elysee Palace in Paris from Brussels ahead of an emergency security meeting at 15:30 local time (14:30 BST).
'Blind horror': France PM
France's prime minister Manuel Valls tweets: "The blind horror and threat of terrorists spares no country. My thoughts are with the victim in Isere and the victims in Tunisia."
Decapitated man 'delivery company manager'
Hugh Schofield
BBC News, Paris
BFM TV says the decapitated man is the manager of a delivery company which owned the vehicle used in the attack.
More from Europe 1 interview
The woman who says she is the suspect's wife went on to tell Europe 1: "I know him as my husband. We have a normal family life. He leaves for work, he comes home. I can't even get through to him.
"We are normal Muslims. We're observing Ramadan. We have three kids and a normal family life. Who can I call to give me more information, because I don't understand what's going on."
Interview with 'suspect's partner'
France's Europe 1 network say
they have interviewed a woman who claims to be the suspect's wife."My heart is going to stop," she said. "I don't know what happened. They arrested him?" she asked. "He left for work at 07:00 - he is a delivery man. He didn't come back between mid-day and 14:00, I was expecting him home this afternoon.
"My sister-in-law told me to switch on the TV, and the news was on. And then she started to cry. It feels like my heart is going to stop," she said.
UK government meeting
UK Prime Minister David Cameron said the the government's emergency Cobra committee is to meet later following the attacks in France and Tunisia. He said Britain was offering "our solidarity in fighting this evil of terrorism".
Islamic State supporters Twitter reaction
BBC Monitoring reports that Islamic State (IS) supporters on Twitter have been linking the attack in France to a recent threat made by IS spokesman Abu-Muhammad al-Adnani.
Three days ago, al-Adnani threatened US President Barack Obama and his "allies". He told them to await "setbacks and surprises".
IS supporters are also linking today's Tunisia and Kuwait attacks to that statement.
Attack 'likely to be inspired by Islamic State'
Frank Gardner
BBC security correspondent
The attack was likely to have been inspired, rather than directed, by the activities of Islamic State jihadists.
The intelligence agencies are getting better at intercepting large plots but in the age of the internet, self-help manuals and self-starting radicalisation that people can do in their bedrooms, it is very difficult for the authorities to stop individual attacks like this.
Police questioning suspects
French police are questioning multiple suspects believed to be connected to the attack.
Earlier, French interior minister Bernard Cazeneuve confirmed that a man named Yacine Sali had been arrested. The 35-year-old had previously been investigated for radicalism.
'Victim's head pinned to gate'
A grim detail has emerged that the head of the decapitated man was placed on the gate of the factory.
The body was found in a different location where the explosion took place.
Manuel Valls: Islamist terrorism has hit France again
France Prime Minister Manuel Valls has announced that he would cut short a tour of Latin America to return to Paris.
Mr Valls told a press conference in Colombia that "Islamist terrorism has hit France again."
He said he would take part by telephone in an emergency meeting called by President Francois Hollande, then rush back to France, the AFP news agency reports.
Mr Valls has already ordered security to be tightened around "sensitive areas" of the country.
French politicians react
Jean-Jack Queyranne, President of the Rhône -Alpes Region: "The savagery struck again in Isère. We must unite our ranks to face with firmness and vigilance to fight terror."
Christophe Boudot, Lyon councillor: "They want to create a climate of psychosis, we must respond with great firmness."
Laurent Wauquiez, former French Secretary of State for European Affairs: "The State must protect the citizens against the terrorist threat that hit. The horror must not give in to fear."
Germany offers its support to France
German Foreign minister Frank Walter Steinmeier says his country stands "shoulder-to-shoulder with France in the defence of our free society against the blind hatred of terror".