Thai protesters move to "final battleground"

BANGKOK (Reuters) - Thailand's "red shirt" protesters congregated in their thousands at an upmarket Bangkok shopping district on Wednesday, preparing a "final battleground" in their campaign to oust army-backed Prime Minister Abhisit Vejjajiva.

About 20,000 had gathered in the commercial heart of the city by early evening as the prospect of further impasse looked set to clip growth in Southeast Asia's second-largest economy after clashes on Saturday killed 23 in Thailand's bloodiest political violence since 1992.

"We will use the Rachaprasong area as the final battleground to oust the government," protest leader Nattawut Saikua told reporters on Wednesday, referring to the hotel and shopping district a couple of blocks from Bangkok's financial area.

"There will be no more negotiations."

The "red shirts," who have vowed "final" days of reckoning before, want Abhisit to quit office and dissolve parliament ahead of new elections. They were fast leaving a protest site close to Saturday's clashes to consolidate at Rachaprasong, which they have occupied for the past 10 days.

Red shirts and their vehicles spilt over a few blocks around the intersection. Some were setting up tents at another junction next to the business district on Silom Road.

"We are staying here until this government is gone," said Ratchada Pumsin, a 46-year-old housewife from the outskirts of Bangkok. "I think our chance of winning is high."

At Victory Monument several kilometres away, more than 1,000 counter-protesters gathered calling for peace and showing support for the government, raising the risk of a potential clash.

Some were carrying pictures of the country's revered monarch and waving Thai and royal flags.

"We met on Facebook and we agree the red shirts need to go because they are causing trouble for Bangkok. We want to show that they are not the only ones with political rights," said a female participant who asked not to be named. "We hope our movement will be a catalyst for change for the better."

The red shirts' decision to gather in one place gives them a strategic advantage, said Sombat Thamrongthanyawong, a political analyst at the National Institute of Development Administration.

"It's safer for them in the Rachaprasong area and with a large crowd, chances of the security forces moving in are slim," he said.

The area is home to Central World, the second-largest shopping complex in Southeast Asia, and other big malls, which shut their doors when the protests began.

"They are holding the economy as their hostage," said Ramkhamhaeng University political scientist Boonyakiat Karavekphan.

Investment bank Morgan Stanley calculates economic growth this year could be cut by 0.2 percentage points due to the impact on tourism, which accounts for 6 percent of gross domestic product in the "Land of Smiles" and employs 1.8 million people.

NIGHT OF REVELRY

Bangkok was peaceful on Wednesday during the second day of the three-day Thai New Year called Songkran, after protesters called off a planned a march on an army base where Abhisit has taken shelter.

Tens of thousands of revellers took to the streets of Bangkok on Tuesday night, dousing each other with water and flour in traditional celebrations.

But tension could flare again when the holiday ends, and financial markets are likely to see renewed selling when they reopen on Friday.

Abhisit, who had been expected to ride out the storm, appears more vulnerable now after the surprise announcement this week of an investigation into possible corrupt funding of his party and comments from the army chief that only polls could end a crisis that has gripped Thailand since 2006.

Abhisit has said he could call elections by the end of the year, although his hand could be forced by a recommendation this week from the Election Commission that his Democrat Party should face charges of illegal funding.

If a court upholds the charges, Abhisit, who came to power in 2008 when the army brokered a deal in parliament, could be banned from holding office and Thailand's oldest political party could be dissolved. Any prosecution could take months, however.

Chumpol Silpa-Archa, leader of the Charthai Pattana party, said coalition partners still supported Abhisit.

"We have no intention to pull out, but we want to see a clear roadmap to resolve the crisis, which eventually leads to a dissolution of parliament," he said.

Coalition partners have been calling on Abhisit to dissolve parliament within six months.

Deputy Prime Minister Suthep Thuagsuban ordered police to hunt for "terrorists" the government blames for the killings in the old quarter on Saturday. More than 800 people were injured in the army's failed attempt to eject protesters from that site.

The streets are still stained with blood, and makeshift Buddhist shrines have been set up near wrecked army personnel carriers daubed with Thai graffiti, such as "tyrant Abhisit."

The confrontation pits the mostly rural and working-class supporters of former prime minister Thaksin Shinawatra, ousted in a 2006 coup and now living abroad, and a traditional elite represented by the British-born and Oxford-educated Abhisit.

(Writing by Nick Macfie; Additional reporting by Ambika Ahuja; Editing by Bill Tarrant)