By Martin Petty
BANGKOK (Reuters) - Thai troops fired at crowds of anti-government protesters in Bangkok on Monday and demonstrators fought back with firebombs and rocks, injuring 94 people and propelling Thailand deeper into political crisis.
One person was shot dead in fighting between the protesters and residents, Satit Wongnongtaey, a minister at the prime minister's office, said on television.
Near dusk, soldiers advanced into an area held by protesters near Government House, the prime minister's office, setting the stage for a final push to end demonstrations that have further hobbled a country still reeling from political chaos last year and the global financial crisis.
Hundreds of soldiers with riot police behind them lined up on two roads approaching Government House, where protesters who support exiled former Prime Minister Thaksin Shinawatra and are known as the "red shirts" have been encamped since late March.
The army also set up roadblocks to stop demonstrators elsewhere from returning to the Government House area.
Preparing for conflict, protesters lit several city buses on fire to block the troops. One side of a government building was on fire, and a Thai television channel said it was caused by a firebomb. Black smoke billowed into the Bangkok sky.
Several thousand "red shirts" were still at Government House as night fell. Prime Minister Abhisit Vejjajiva appeared on television urging people to leave and guaranteeing their safety. Abhisit had declared a state of emergency in Bangkok on Sunday.
The clashes came two days after "red shirt" protesters forced cancellation of a high-profile Asian summit in Thailand, a big embarrassment for Abhisit, whom they have been trying to oust. He took office only in December.
Standard & Poor's and Moody's, which already have a negative outlook on Thailand's sovereign ratings, said on Monday the renewed political unrest increased the risk of a downgrade.
"Tourism can rebound, but investor confidence will be very hard to get back," said S&P analyst Kim Eng Tan. "Going forward we expect investors will become a lot more risk averse."
Several countries issued travel advisories for Thailand.
"I believe the darkest days in Thailand's history are yet to come as we see no swift solution to ongoing divisiveness," said Prinn Panitchpakdi, a CLSA Asia-Pacific analyst.
Thaksin, the figurehead of the protests, told CNN from an undisclosed location that people had died.
"Many people are dying ... They even take the bodies on the military trucks and take them away," he said.
Thailand's Emergency Medical Institute said 94 people, including soldiers, were injured in Monday's clashes, including 24 still hospitalised.
USE FORCE IF NECESSARY
The violence began before dawn at the start of the Thai New Year holiday, much of it near one of the city's central traffic hubs Din Daeng junction, which "red shirts" had blockaded.
Even as soldiers and protesters battled in the streets, in other parts of town squealing children and shrieking adults blasted each other with squirtguns as part of new year celebrations.
General Songkitti Chakabakr, Thailand's top military commander, said in a televised statement on Monday the committee charged with restoring order would strive "through every peaceful means" to bring things back to normal as soon as possible, but reserved the right to use force if necessary.
Thailand's intractable political divide pits royalists, the military and the urban middle class against a less well-off rural majority loyal to Thaksin and his populist policies.
Last year, politicians backed by the "red shirts" were in power and royalist "yellow shirt" supporters of those now in government held nearly nonstop protests in the capital, culminating in a week-long occupation of Bangkok's main airports.
The political strife died down for a while after Abhisit came to office through parliamentary defections Thaksin supporters say the army engineered. They demand new elections, which they would be well placed to win.
Protests flared anew after Thaksin, ousted in a 2006 coup and living in exile to avoid jail on a corruption conviction, set a deadline for Abhisit to resign by April 8 -- the day before Thailand was to host the East Asia Summit in Pattaya.
His supporters descended on the beach resort south of Bangkok. Abhisit's strategy of treating them gently to avoid inflaming passions backfired when they smashed their way through a cordon of troops into the venue, forcing an evacuation of leaders by helicopter.
Now, with fires blazing in the Bangkok streets and smoke from burning buses and a building rising over the city of some 12 million, a political solution appears as distant as ever.
Abhisit seems intent on sweeping the protesters from the city before the new year festivities end, preferably with a minimum of casualties, to burnish his credibility after the summit fiasco.
He appeared on television late on Sunday, flanked by military commanders, to say a coup was not going to happen.
Thailand has seen 18 coups since 1932, and the military often has the final say in Thai politics, sometimes with the blessing of the revered king.
(Additional reporting by Vithoon Amorn, Kittipong Soonprasert, Panarat Thepgumpanat and Andrew Marshall; Writing by John Ruwitch and Bill Tarrant; Editing by Alan Raybould and Jerry Norton)