BEIJING, Feb 7 (Reuters) - Chinese police have arrested the manager of a factory which produced chili powder tainted with a carcinogenic red dye and sold it to several large supermarkets, state media reported on Wednesday.

The factory in China's southwest Chongqing region mixed cancer-causing Sudan IV -- a compound used in industrial dyes -- in their chili products "in the pursuit of huge profits", Xinhua news agency said.

Chongqing's quality watchdog had closed the factory down and halted sales of the chili powder, Xinhua said.

On Tuesday, local media reported the closure of two cosmetics firms for selling lipsticks containing the same toxic dye.

In November, Hong Kong was among several Chinese cities hit by eggs tainted with Sudan IV, which had been mixed with chicken feed to make egg yolks redder and therefore more expensive.

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