Briton beheaded in supermarket attack

According to witnesses, the murderer picked up her severed head, took it outside and placed it on the pavement - shouting he had "taken my prize" - before fleeing.

A 28-year-old homeless Bulgarian man was arrested after he was chased by security guards. He was being questioned by police last night.

A regional government spokeswoman said the killer obtained a knife inside the store before launching yesterday's frenzied attack. According to local reports, he has a history of violence and was known to police.

Colin Kirby, who witnessed the killing, said: "There were people shouting. There was a Hispanic-looking guy walking behind me, looking very scruffy, muttering to himself, carrying what I thought was a joke head by the hair.

"The Chinese came running out of the other shops, running down towards the big shop where he had come out.

"The security guards came out. They chased him across the road. By this time he's empty-handed. They got him on the other side of the road. A couple of people tried to get him, they flattened him and got him on the ground.

"The police arrived. The security and the police had to hold people off - they were queuing up, trying to kick the guy."

He added: "I spoke to an English couple who were in the shop. They said they couldn't believe it. They said this guy just walked in, pulled a big knife and started stabbing at her."

The victim is understood to be English and of Chinese descent.

A Foreign Office spokesman said: "We are aware of reports of the death of a British national in Tenerife and are urgently investigating."

Mayor Jos Revern said the incident was "the most horrific crime to hit the resort in recent years".

A woman who works at an estate agency on Avenida Juan Carlos, near the murder scene, said she drove past shortly after the killing.

She said: "It is horrific. I drove by about ten minutes later and there were lots of crowds about.

"We have heard about from the local news and from the mayor speaking on radio and television.

"This man had a real wild moment and attacked this woman. There doesn't seem to be any relation between them."

She added: "It was right by one of the big Chinese ‘everything-for-a-pound' stores.

"We have the occasional robbery and there were a few murders linked to timeshares a few years ago. It's very sporadic.

"But this horrific, senseless violence hasn't been known here before."

Araceli Perez, 33, witnessed security guards detain the man. "Guards from the commercial centre jumped on him and the head was rolling on the floor," she said. "Many people saw that on the street. Then he was caught by the police.

"He must be insane because he was running away with her head in his hands."

Tenerife is a popular tourist destination, with more than 1.3 million Britons visiting each year. It is the largest of the Canary Islands, located off the north-west coast of Africa. Los Christianos is one of its most popular resorts.

In January 2006, Britons Billy and Florence Robinson, who ran a timeshare business on the island, were found murdered by hitmen whom police believed had been hired by rival operators.

In February 2010, Yorkshireman Peter Cockshutt, 71, was stabbed to death at his villa on the Costa del Silencio in what police described as a bungled robbery.