Thai protesters seek revenge after clashes

BANGKOK (Reuters) - Protesters seeking to topple Thailand's government on Wednesday threatened more demonstrations in the capital, a day after two people died and over 400 were injured in the worst street violence in 16 years.

Prime Minister Somchai Wongsawat briefed Southeast Asian ambassadors on the deepening political crisis, telling them the government was "confident that it can take care of the situation," a diplomat at the meeting told Reuters.

The long-running campaign and recent violence have hurt investor confidence and distracted policymakers when they should be focussed on slowing economic growth and the fallout from the global credit crisis, analysts say.

Leaders of the People's Alliance for Democracy (PAD) vowed to press on with the four-month street campaign.

"We can't stand this government with blood on its hands. More people will hit the streets to oust this government," Sirichai Maingam, a leader of the People's Alliance for Democracy (PAD), told TV 3 television.

The streets around parliament were quiet after the military deployed unarmed troops overnight to help police restore order.

Police identified the man killed by a car bomb near parliament on Tuesday as Methee Chatmontri, a former police colonel and relative of a PAD leader in northeast Thailand.

Deputy Bangkok police chief Amnuay Nimmano told reporters they were investigating the source of the explosives and whether Methee knew the owner of the Jeep SUV destroyed by the blast.

A female protester also died in the clashes with police who fired volleys of teargas and stun grenades at the crowds. Demonstrators fought back with stones, clubs and pistol shots.

"SOMCHAI, THE TYRANT"

On a visit to injured police in hospital, Somchai defended the use of teargas against the protesters and said he was still open to negotiate with the PAD.

"Police were stabbed with steel bars, flag poles and even shot. The rally wasn't as peaceful as the protesters claimed," Somchai told reporters.

Moments later, he was accosted by a female PAD supporter who shouted: "Somchai, the Tyrant. Somchai, the Killer."

PAD radio and television broadcasts urged supporters in the provinces to join the street campaign, which began in late May.

The PAD is an extra-parliamentary coalition of businessmen, academics and activists who see Prime Minister Somchai Wongsawat as a puppet of Thaksin Shinawatra, his brother-in-law, who was deposed in a coup in 2006 and has fled to exile in London to escape graft charges.

"The marked escalation in violence now further threatens the business climate, tourist receipts, capital flows, the stock market and the baht," JPMorgan Chase said in a research note.

Foreign investors offloaded Thai shares worth a net 804 million baht on Tuesday, bringing total net selling to 129.7 billion ($3.8 billion) this year. By comparison, daily stock market turnover in October has averaged just 11.4 billion baht.

The main stock index was down more than 8 percent, but no worse than other regional bourses buffeted by the global credit crisis.

"Foreign investors have given up. They won't come back until there is a new election and a new government," one stock analyst told Reuters.

Tuesday's violence appalled many Thais, including one Thai Airways pilot who refused to let a government member of parliament board his plane for a domestic flight, radio reported.

The Bangkok Post carried a picture supplement, blurring out bits of photos showing demonstrators who had parts of their legs or feet blown off by exploding gas canisters.

The Post's front page headline read 'Brink of anarchy'.

The Nation's headline was 'Bloodbath in Bangkok'. In an editorial it berated Somchai's government for abandoning "its reconciliatory posture" and appealed for dialogue.

"Using force as the government did will only worsen the current standoff. If Somchai is not true to his own promises, then he should resign," the Nation newspaper said.

Somchai, who has preached national reconciliation but failed to engage the PAD in a dialogue, has refused to go.

(Writing by Alan Raybould; Editing by Darren Schuettler and David Fox)