A suspect of a horrific terrorist attack that left one person dead and two injured has been arrested, while the victim has been identified.

Police say that a decapitated head, that had Arabic writing on it, was pinned to the gates of a gas factory in Saint-Quentin Fallavier, near Grenoble, in eastern France on Friday.

The victim was a businessman from the suburbs of Lyon.

The attack came on an especially bloody day worldwide, with 39 gunned down at a beach resort in Tunisia and at least 27 killed in a suicide bombing in Kuwait.

Read about the Tunisia attack and the Kuwait bombing below

• Terrorists attack Tunisian hotel
• IS bombing at Kuwait mosque

In France, the attacker has been identified as 35-year-old Yassin Salhi and he, along with his wife, have been taken into custody.

French Interior Minister Bernard Cazeneuve said Salhi was known to French security services.

It remains unclear whether Salhi was acting alone, or had accomplices. The incident occurred just before 10am (local time) on Friday.

An Islamist flag was reportedly found at the site of the attack, which Australia’s Foreign Minister Julie Bishop described as “horrific”.

French President Francois Hollande was of no doubt that it was an intended terrorist attack.

“This attack was in a vehicle driven by one person, perhaps accompanied by another, which rammed its way at high speed into this establishment which contained bottles of gas,” he said.

“The intent was without doubt to cause an explosion. It was a terrorist attack.

The scene outside the factory. Photo: ledauphine.com

“In these circumstances, first of all, our thoughts go to the victim.

“We all remember and have in mind what happened in our country [Charlie Hebdo attack] and other countries as well.”

French Prime Minister Manuel Valls ordered increased security measures at all sensitive sites in the area.

Mr Valls, speaking from Bogota, added: “Islamist terrorism has hit France again.”

The news comes after Islamist attacks in France that saw 17 people killed in January.

Those attacks started with shootings at satirical magazine Charlie Hebdo that killed 12. A policewoman and four hostages in a Jewish supermarket were also killed during the three-day attacks.

Ms Bishop condemned the attacks and said they were a reminder of the need to be vigilant about a possible terrorist attack in Australia.

“If the early reports are true, this is another horrific reminder of the brutality of these terrorist organisations that are attacking civilians in a most violent and barbaric way,” she told reporters in Melbourne.

“There is an indication that a black flag with Arabic writing was found near the scene and that there was a decapitated head.

“That would be consistent with other terrorist attacks that we’ve seen in recent times.

“It is a grim reminder of the horrific nature of these terrorist attacks and we must be ever vigilant to ensure that this doesn’t happen in Australia.”

The deadliest attack was in North Africa, where 39 people were killed when a gunman opened fire on tourists at a beach resort in Sousse, Tunisia.

Health authorities said 36 other people were wounded in the attack at the Imperial Marhaba hotel in the Port El Kantaoui district.

Those killed included British, German and Belgian nationals, the Tunisian health ministry said in a statement. No Australians were among the dead, Ms Bishop said.

In Kuwait, a suicide bomber killed 27 people in an attack on a Shiite Muslim mosque.

Health authorities said more than 200 people were wounded, with eight in a critical condition.

A witness said the bombing happened when the Al-Imam al-Sadeq mosque was packed with some 2,000 worshippers during Friday prayers.

Najd Province claimed responsibility for the deadly attack in a statement posted on social media.

The statement identified the bomber as Abu Suleiman al-Muwahed and said the target was a “temple of the rejectionists” – a term used by the Islamist militant group to refer to Shiite Muslims – and said dozens were killed or wounded.

Najd Province has claimed similar bombings against Shiite mosques in Saudi Arabia in recent weeks.

– with AAP, ABC