* Three factory managers arrested, to be investigated for negligence
* At least 20 hurt as protesters clash with police
* CCTV footage shows apparent arson attempt at another factory
* Retailer Sears says facility should not have been making its clothes
By Ruma Paul
DHAKA, Nov 28 (Reuters) - Three supervisors of a Bangladeshi garments factory were arrested on Wednesday as protests over a fire that killed more than 100 people raged on into a third day, with textile workers and police clashing in the streets of a Dhaka suburb.
The government has blamed last weekend's disaster, the country's worst-ever industrial blaze, on saboteurs and police said they had arrested two people who were seen on CCTV footage trying to set fire to stockpiles of cotton in another factory.
The fire at Tazreen Fashions has put a spotlight on global retailers that source clothes from Bangladesh, where wage costs are low - as little as $37 a month for some workers.
Rights groups have called on Western firms to sign up to a safety programme in the world's second-biggest clothes exporter.
U.S. retailer Sears Holdings Corp said on Tuesday its clothing was not meant to be made in that textile factory, and was investigating reports that one of its brands had been found in the charred debris.
Wal-Mart Stores Inc, the world's largest retailer, said one of its suppliers subcontracted work to the burned factory without authorisation and would no longer be used.
Witnesses said that at least 20 people were injured on Wednesday in the capital's industrial suburb of Ashulia as police pushed back protesters demanding safer factories and punishment for those responsible for the blaze, which killed 111 workers and injured more than 150.
Thousands of workers poured out onto the roads, blocking traffic, as the authorities closed most of the 300 garment factories in the area. They were driven back by riot police using tear gas and batons.
Three employees of Tazreen Fashions - an administrative officer, a stores manager and a security supervisor - were arrested and paraded in front of the media.
Dhaka District Police Chief Habibur Rahman told Reuters they would be investigated for suspected negligence.
He said that police were investigating complaints from some survivors that factory managers stopped workers from running out of the multi-storey building when a fire alarm went off.
Representatives of the Tazreen Fashions factory, including the owner, were not available for comment.
The country's interior minister, Mohiuddin Khan Alamgir, has blamed arsonists for the fire.
Adding to the case for sabotage, CCTV footage aired on a news channel showed two employees of another factory in the Ashulia area trying to set fire to stockpiles of cotton.
Police chief Rahman said a woman and a man, who were identified from the video, had been taken into custody.
The clip shows a woman dressed in a mauve head scarf and a traditional loose garment on her own passing through a room with garments piled neatly in various places on a table. She briefly disappears from view beneath the table and then is shown again walking through the room and out of range of the camera.
Smoke soon begins billowing, first slowly then more rapidly, from the place where the woman was seen beneath the table.
Workers come running in and try to douse it using various means. The woman first seen comes back into the room and is seen helping other workers in efforts to put out the fire.
Two other incidents in the outskirts of Dhaka - a fire at a factory on Monday morning and an explosion and fire at a facility on Tuesday evening - has raised concern among manufacturing leaders that the industry is under attack.
"The government today says they are smelling sabotage. We don't yet know what they mean by that, we will know in a few days," Annisul Huq, former president of the Bangladesh Garment Manufacturers and Exporters Association, told Reuters. "I don't know what information they have but we don't like this link."
Bangladesh has about 4,500 garment factories and is the world's biggest exporter of clothing after China, with garments making up 80 percent of its $24 billion annual exports.
Working conditions at Bangladeshi factories are notoriously poor, with little enforcement of safety laws. Overcrowding and locked fire doors are common.
More than 300 factories near Dhaka were shut for almost a week this year as workers demanded higher wages and better conditions. At least 500 have died in garment factory accidents in Bangladesh since 2006, according to fire brigade officials. (Writing by John Chalmers; Editing by Robert Birsel)