A Briton kidnapped in North Africa has been murdered, reportedly beheaded by Al Qaeda terrorists.
Edwin Dyer was executed after Britain rejected demands for the release of fundamentalist cleric Abu Qatada and the payment of a multi-million pound ransom.
The 60-year-old Briton is said to have been killed on Sunday but the details were not released until yesterday.
News of the death came as Barack Obama arrived on his first visit as U.S. President to the Middle East to deliver a speech to the Muslim world.
Mr Dyer's murder could be part of a double message of defiance by Al Qaeda ahead of Mr Obama's speech in Cairo today.
In an audio tape yesterday - his first since mid-March - Osama Bin Laden threatened Americans, blaming Mr Obama for inflaming hatred of the U.S. by ordering Pakistan to crack down on militants in the Swat Valley.
The message was broadcast as the U.S. President touched down in Saudi Arabia - the country of Bin Laden's birth.
It came just hours after Al Qaeda deputy leader Ayman Al Zawahri said the Cairo speech would not change the 'bloody messages' the U.S. is sending Muslims through wars in Iraq and Afghanistan.
Mr Dyer was abducted four months ago while attending a music festival as a tourist in Niger and is thought to have been sold to Al Qaeda In The Islamic Maghreb, the terror network's North African wing, by a tribal militia who kidnapped him.
It announced yesterday on its website that Mr Dyer had been killed - with unconfirmed reports saying he had been beheaded - after a deadline for the release of Qatada from prison in Britain was not met by the Government.
Other European and Canadian hostages kidnapped in similar circumstances have been freed after ransoms were paid but the British government has a blanket policy against such deals on the grounds they would only encourage more abductions.
Gordon Brown offered his condolences to Mr Dyer's family. The Prime Minister told the Commons: 'I want those who use terror against this country and British citizens to know beyond doubt that they will be hunted down and brought to justice.
'There will be no hiding place for them and no safe haven for terrorists who attack our country.'
Mr Dyer, who had been living and working in Austria for more than 20 years and spoke fluent German, was on holiday in West Africa with a German travel operator.
He was abducted, along with a Swiss couple and a German woman, near the border with Niger.
A gun was said to have been fired close to Mr Dyer's head as a signal the tourists would be killed if they resisted. It was believed that the hostage-takers were Tuareg rebels, who have regularly clashed with Mali's army, who then sold them to Al Qaeda.
Threat: Mr Dyer's killers had demanded the release of militant Abu Qatada
In February, Al Qaeda In The Islamic Maghreb released a video of the captives with heavily-armed masked gunmen behind.
Two of the captives were released in April but days later the terrorists issued an ultimatum, warning they would kill Mr Dyer unless Britain freed Qatada in 20 days.
The deadline was extended by 15 days to May 30, but in the end frantic efforts to secure the release of the Briton failed.
A ransom of £8.6million was also said to have been demanded.
In a statement issued yesterday the terrorists said: 'The British captive was killed so that he, and with him the British state, may taste a tiny portion of what innocent Muslims taste every day at the hands of the Crusader and Jewish coalition to the east and to the west.'
The Foreign Office described suggestions Mr Dyer was beheaded as 'speculation'.
Hamid Ghomrassa, a security expert in North Africa, said the killing and Bin Laden's warning carried a clear message.
'Al Qaeda's top messages are first, that a day before his expected speech to the Muslim world Obama must understand that Al Qaeda is a force in the region that cannot be ignored,' he said.
'And second, that Al Qaeda's threats should be taken seriously, and from now on the West should understand that paying ransoms to get back hostages is the only way to deal.'
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