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Thai police confront red shirts after grenade attack

MYT 3:00:55 PM

BANGKOK (Reuters) - Hundreds of Thai riot police confronted anti-government protesters in Bangkok's business district on Friday, a day after grenades killed at least one person and wounded 86, but later pulled back without violence.

Police officers in riot gear create a cordon in Bangkok's Silom business district April 22, 2010. (REUTERS/Adrees Latif)

The grenade blasts, close to the night market and racy Patpong bars, came 12 days after clashes killed 25 people following a failed army attempt to evict protesters from a rally site in the country's worst street violence in 18 years.

Thousands of "red shirt" supporters of ousted premier Thaksin Shinawatra remain in their fortified encampment in an upscale shopping area of central Bangkok, vowing to stay until Prime Minister Abhisit Vejjajiva dissolves parliament for new elections.

Adding to the volatile mix, a new "multi-coloured" group is planning a demonstration of 50,000 people in Bangkok's old quarter on Friday to demand the red shirts end their rally, creating the potential for more havoc.

Deputy Prime Minister Suthep Thaugsuban said late Thursday night three had died in the grenade attacks, but the goverment's Erawan Emergency Centre put the toll at 1 dead and 86 wounded. No explantion was given for the conflicting tolls.

Investors who had been buying Thai stocks this week, expecting a solution to the seven-week standoff might come in the form of house dissolution or an army operation to remove protesters, were taking "a huge risk", Kim Eng securities said in a note to clients on Friday.

"An army attack to remove Reds may develop into full-scale, long-drawn war," it said.

Thailand's currency, the baht, fell and shares dropped 1.3 percent, further than other Southeast Asia markets, in reaction to the attacks. Bond prices rose as investors switched to safer government debt.

The central bank said on Wednesday the crisis was hitting confidence, tourism, private consumption and investment, although exports, which are crucial to economic growth, have not been affected so far by the unrest.

The United States, Britain and Australia have warned their citizens to reconsider travel plans to Thailand, where tourism accounts for 6 percent of the economy.

FUEL ON BARRICADE

On Friday morning, police demanded the "red shirts" dismantle their barricade of tyres, bamboo poles and chunks of concrete near the entrance to Silom Road and the business district. A Reuters photographer said police pulled back after red shirts poured fuel on the barricade.

The government said the grenades were fired late on Thursday from the red shirt protest area.

Red shirt leaders denied they were to blame, but they have acknowledged that unknown elements of the military sympathise with them and, indeed, may have helped defend them during the April 10 crackdown.

Analysts say the protests are radically different from any other period of unrest in Thailand's polarising five-year political crisis -- and arguably in modern Thai history, pushing the nation close to an undeclared civil war.

They are reflected in a split in the army, with one faction supporting the protesters, including retired generals allied with Thaksin, who was ousted in a 2006 coup and later sentenced in absentia to two years in prison for corruption.

The divide has also split the citizenry into two increasingly angry groups.

A pro-government crowd, fed up with the disruptions, loss of business and livelihoods the protests have caused, gathered on Silom Road across from the red shirt barricades on Friday, waving Thai national and royal flags and shouting "get out". They also burned red shirt flags.

But any attempt to disperse the protesters from their self-contained, makeshift village in central Bangkok risks heavy casualties and the prospect of clashes spilling into high-end residential areas.

The chief investigator for the grenade attacks said authorities had arrested one of the 24 red shirt figures they have been hunting.

Tarit Pengdit, head of the Department of Special Investigation (DSI), said on state TV the man admitted seizing weapons from security forces during the April 10 crackdown and distributing them to others.

"The ongoing incidents are categorised as terrorism acts ... which carry the maximum penalty of death...," said Tarit, who is tasked with probing all the politically-related violence.

The red shirts say British-born and Oxford-educated Abhisit came to power illegitimately in December 2008, heading a coalition the military cobbled together after courts dissolved a pro-Thaksin party that led the previous government.

(Additional reporting by Apornrath Phoonphongphiphat, Viparat Jantraprap, Vivek Prakash and Vithoon Amorn; Editing by Nick Macfie)

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