President Francois Hollande has raised the security level in France to its highest possible point, following the terror attack near Lyon.
Hollande described the attack as "cowardly" and has promised that thousands of police officers will be deployed across France in order to improve security.
The French president said this morning's incident had "all the hallmarks of a terrorist attack," adding that the suspect in custody had been identified.
Francois Hollande said there was "no doubt" the terrorists, one man and an accomplice, meant to cause an explosion at the factory near Lyon.
"A decapitated body was found with inscription written on it. There is one dead and two injured" Hollande told a press conference at the Brussels summit.
France will "never give into fear" and the attack must not "create unnecessary division," he added.
David Cameron had been due to talk with French President Francois Hollande about the situation in Calais this morning.
ITV News Deputy Political Editor Chris Ship reports:
David Cameron has spoken to French President Francois Hollande to convey his sympathies "over what appears to be an appalling incident", Downing Street said.
"Details are still emerging, so we wait to see those," the spokesman continued. "But it clearly looks an extremely concerning situation and our thoughts are with all those affected by it."
President Obama has told French President Francois Hollande that the US is not spying on his phone calls.
The two leaders spoke by phone earlier after the release of WikiLeaks documents which claimed the National Security Agency had spied on Hollande and his two predecessors, Nicolas Sarkozy and Jacques Chirac.
The White House said Mr Obama had "reiterated that we have abided by the commitment we made to our French counterparts in late 2013 that we are not targeting and will not target the communications of the French president".
Mr Hollande had earlier described the allegations as "unacceptable between allies".
Francois Hollande, the French president, has branded as "unacceptable" the reported spying by the US on three French presidents.
The allegations that the National Security Agency spied on Hollande, and before him presidents Jacques Chirac and Nicolas Sarkozy, were made by Wikileaks, which cited intelligence reports.
"France will not tolerate actions that threaten its security and the protection of its interests," Hollande's office said in a statement.
"Commitments were made by the US authorities. They need to be recalled and strictly respected."
The US ambassador to Paris was summoned to the French foreign ministry on Wednesday over the claims.
French President Francois Hollande has paid tribute to the 10 people killed in an accident involving two helicopters in Argentina.
"The brutal demise of our compatriots is an immense sadness," Hollande said in a statement.
French President Francois Hollande said if a lasting Ukraine peace agreement is not reached "we know the scenario ... it is called war".
President Francois Hollande has attended a crisis meeting with French cabinet ministers to discuss yesterday's attack on satirical magazine Charlie Hebdo.
Une nouvelle réunion interministérielle de crise est en cours à la suite de l'attentat d'hier à Charlie Hebdo http://t.co/uAnR5rLtXm
There have been 'several detentions' after the Charlie Hebdo shooting, Manuel Valls has said.
BREAKING: French premier says there have been 'several detentions' in search for 2 suspects in attack