MADRID (Reuters) - A British woman was decapitated in a supermarket on the Spanish resort island of Tenerife on Friday by a man who then fled into the street grasping her head, the local emergency services said.

The mayor of the town of Arona, quoted by Spanish media, said the man, who was arrested as he tried to escape, was a 28-year-old Bulgarian with a history of mental illness.

Media reports described the victim as a British woman in her 60s who had no known relationship to her attacker.

Witnesses said the man walked up to his victim in a Chinese store in the Los Cristianos district on Friday morning, pulled out a knife and stabbed her in the neck.

"I heard screaming and looked behind and saw a scruffy, unkempt man of about mid-twenties holding a head by the hair," said Colin Kirby of Tenerife Magazine.

"I thought at first it was a sick joke stunt, the man was muttering and shouting and more people started screaming."

The attacker was eventually tackled by security guards and passers-by.

A witness told Spanish radio station Cadena Ser he had just parked his car when he saw a man running down the street holding a woman's head in his hand, covered in blood.

Tenerife, the largest of Spain's Canary Islands off the north west coast of Africa, is a popular destination for British holidaymakers and retirees.

(editing by David Stamp)