A man was beheaded after suspected Islamist beheaded a man and pinned the severed head to the gates of a gas factory near the French city of Lyon on Friday.
The alleged assailant, identified as Yassin Salhi, also caused an explosion by smashing his vehicle into the Air Products factory.
The attack took place on the same day as two other attacks claimed by the Islamic State, which left 38 people dead at a beach resort in Tunisia and 27 in a suicide bombing in Kuwait.
According to media reports, Lyon gas factory victim's head found was "hung onto the fence surrounded by two Islamic flags bearing the Shahada, the profession of (the Muslim) faith," said French prosecutor Francois Molins.
Valls said yesterday's attack would create tension in France -- home to Western Europe's largest Muslim population -- that "will be exploited".
It also came nearly six months after the Islamist attacks at French satirical magazine Charlie Hebdo and supermarket attack in and around Paris that left 17 people dead.
French President Francois Hollande labelled the factory beheading "a terrorist attack," adding that "the intent was without doubt to cause an explosion".