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KUALA LUMPUR (Reuters) - Malaysian police arrested three people, including a teenager, suspected of planning to detonate a bomb at an annual beer festival in the capital, the police chief said on Tuesday.

The two-day "Better Beer Festival" was cancelled last month following objections from an Islamist party, which said the event could lead to rape and other crime and free sex.

A construction contractor, a former soldier and a 19-year-old student with links to the Islamic State militant group were arrested in the northern state of Kelantan last Tuesday on suspicion of planning the attack, Inspector-General of Police Mohamad Fuzi Harun told reporters.

"The suspects had plans to attack the beer festival, houses of worship and entertainment outlets in Kuala Lumpur and surrounding areas," he said.

The former soldier, 34, had provided funds to the student that were used to produce and test improvised explosive devices (IEDs) for use in the attacks, Mohamad Fuzi said.

Police had seized materials used for making three IEDs with an estimated blast radius of 30 metres, he said.

"It's a big area," he said. "It would have caused a lot of deaths if set off at the beer festival."

The contractor, a 25-year-old man, was suspected to be linked to a militant cell that had carried out a grenade attack on a bar on the outskirts of the capital last year, Mohamad Fuzi said. The attack on the Movida bar, which wounded eight people, was ordered by a Syrian-based Malaysian militant and is considered to be the first successful attack by the Islamic State in the country.

Police were still investigating whether the three suspects had received orders from other parties.

Around 6,000 people had been expected to attend the "Better Beer Festival", showcasing craft beers from at least 11 countries, according to the event's organisers.

Protests against events considered "Western" and unIslamic are common in Muslim-majority Malaysia and are usually led by the opposition Pan-Malaysian Islamic Party (PAS) and conservative Islamist NGOs.

Since January, Malaysia has detained 78 people with suspected links to Islamic State in its crackdown on militancy, Mohamad Fuzi said.

Five Malaysians are believed to have joined up with Islamic State-linked groups in the southern Philippines, while 53 others have joined the group in Syria, he added.

(Reporting by Rozanna Latiff; Editing by Nick Macfie)

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