Thai protesters seek reinforcements, tensions rise

BANGKOK (Reuters) - Thousands of Thai anti-government protesters looked for reinforcements on Thursday after ignoring a midnight deadline to end two months of street rallies that have hardened political divisions and hurt the economy.

Leaders of the mostly rural and urban poor protesters urged supporters to join their barricaded encampment in Bangkok's commercial district after authorities abruptly postponed plans to cut power and water to the area following outcry from residents.

"We urge that our supporters come and help us here because the more people we have, the harder it is for them to hurt us," Nattawut Saikua, a protest leader, told cheering supporters.

Prime Minister Abhisit Vejjajiva Abhisit is under enormous pressure to end the five-week occupation of the shopping district by protesters who say he lacks a popular mandate after coming to power in a controversial parliamentary vote 17 months ago.

"To come out publicly with a threat, causing major worries among some and raising hope among others, and then to retract it, was a very bad move for Abhisit," said Sombat Thamrongthanyawong, head of the National Institute of Development Administration, a private research institute.

"It's another blow to his credibility. And that's going to make it harder to resolve the crisis, let alone govern."

Abhisit's threats follow the unravelling of a government peace plan proposed last week to end a political crisis that has killed 29 people, paralysed parts of Bangkok and slowed growth in Southeast Asia's second-biggest economy.

Consumer confidence suffered its biggest drop in at least four years in April, hitting a nine-month low, data showed, suggesting spending in shops and department stores is drying up as the crisis grinds on, a troubling sign for a sector that accounts for half the economy.

Both sides appear to be running out of options, raising the risk of a violent confrontation and flummoxing investors in one of Asia's most promising emerging markets.

"The markets have no idea what to make of the situation. It seems like we're heading back to square one," said Sukit Udomsirikul, a senior analyst at brokerage Siam City Securities.

"It's obvious it's more difficult than they thought in terms of how to disperse the protesters," Sukit added. "A resolution to the crisis looks far off."

Foreign investors have turned negative since violence flared in April and have sold $584 million (393.2 million pounds) in Thai shares in the past six sessions, cutting their net buying so far this year to $607.6 million as of Wednesday.

FISSURES IN PROTEST MOVEMENT

Disparate views among protest leaders -- from radical former communists to academics and aspiring lawmakers -- make it difficult to reach consensus. Many face criminal charges for defying an emergency decree and some face terrorism charges carrying a maximum penalty of death.

Several harbour political ambitions and need to appease rank-and-file supporters. Others fear ending the protest now would be a one-way ticket to jail. Some hardliners advocate stepping up the protests to win the fight once and for all.

"Most people want this to end but they are sceptical because the government cannot guarantee our safety," Korbkaew Pikulthong, another protest leader, told Reuters. "The problem is some of us face severe charges and the government shows no inclination to be fair to us. A few want to fight on because we have come so far."

On Wednesday, Abhisit cancelled a proposal to hold elections on November 14 under his "national reconciliation" plan and called off further talks with the protesters.

Despite its reversal of plans to cut off power and water to the area packed with hotels, embassies, businesses, high-end apartments and two public hospitals, authorities say they will start diverting some transportation from the district.

The red-shirted protesters, mostly supporters of former premier Thaksin Shinawatra who was ousted in a 2006 coup, have said they would only disperse if a deputy prime minister faces criminal charges over a deadly April clash between troops and protesters.

(Additional reporting by Ploy Ten Kate; writing by Jason Szep; editing by Bill Tarrant)