(Adds police on militants, comments by Merkel ally)
HAMBURG, July 8 (Reuters) - Anti-capitalist Black Bloc militants, many hooded in black, moved to the front of a demonstration against the G20 summit of global leaders in the port of Hamburg, police said on Saturday, raising fears of a third day of violence.
After a night of rioting in which radicals looted shops, hurled objects and set alight street barricades, the city centre was in lock down with luxury shops along the main streets barricaded up and many protected by security guards.
At least 40,000 people had gathered by about 1300 GMT and police in riot gear lined the streets. The anti-globalisation ATTAC movement, which is organising the march, said it expected about 100,000 people to attend.
A third day of clashes would be bad news for Chancellor Angela Merkel who wanted to showcase her commitment to free speech by holding the summit in Hamburg, a trading hub with a tradition of leftist radicalism.
Images of smoke rising over parts of the city, burning cars, wrecked shops and streets awash with debris have raised questions about that strategy, and Hamburg police have needed reinforcements from across Germany.
Behind heavy security, world leaders and officials are putting the final touches to a joint statement on issues ranging from trade to climate change on the final day of the summit.
The head of Hamburg police earlier warned he expected radicals to mingle with the 'G20 - not welcome!' demonstration and expressed shock at the "wave of destructive anger", rioting and arson seen since Thursday.
Mostly young protestors, some holding balloons, others pushing prams, wanted to keep the demonstration peaceful as hip-hop and Turkish music blasted out of speakers.
"The message is G20 - never again and certainly not in Hamburg," Oskar Zach, 16, told Reuters. "We aim to remain peaceful. We want to show we can demonstrate without violence."
ATTAC coordinator Thomas Eberhardt-Koester said the movement wanted to "bring our criticism of the G20 and our alternatives for fair global policies onto the streets".
However, in the last three days, more than 200 police officers have been injured. Some 143 people have been arrested and 122 taken into custody. The number of injured protestors was not available.
On Friday night, special armed police were deployed with sub-machine guns after militants from around Europe started hurling projectiles, including paving slabs, and torching cars.
Police have used water canons to disperse crowds of radicals, especially those who refused to remove hoods or masks, which are illegal at demonstrations in Germany.
Ministers decried the violent protestors and said they would face the full force of the law. "These are not demonstrators, they are criminals," said Interior Minister Thomas de Maiziere.
But some other politicians criticised the choice of venue.
"We should ask whether the state, with its monopoly of the right to uphold security and order, was well advised to choose Hamburg," Hans-Peter Uhl, a senior member of Bavaria's conservatives, sister party of Merkel's Christian Democrats (CDU) told Handelsblatt business daily.
Hamburg residents were also angry at the destruction.
"Merkel underestimated the protests. The least she can do now is come visit (the district of) Sternschanze and see the damage for herself," said Kai Mertens, a 50-year-old programmer.
(Writing by Madeline Chambers; Editing by Jon Boyle)