By Martin Petty and Ambika Ahuja
BANGKOK (Reuters) - Anti-government protesters in Thailand prepared for mass marches to undisclosed locations in the capital on Friday in defiance of an emergency decree imposed to quell nearly a month of protests.
Prime Minister Abhisit Vejjajiva appeared on television on Thursday evening to insist he would not order a crackdown.
The army leadership has also said it does not want to use force, but there could be confrontation if the security forces stop the red shirts marching on sensitive areas, such as government buildings.
One senior military source, who declined to be named, said: "A crackdown is very unlikely in the next few days unless some group does something crazy, like a serious bomb attack or an attempted attack on important figures."
"The military is taking a wait-and-see approach. Rather the current state of paralysis than having deaths," he added.
The risk of confrontation has raised concern of fallout on Thailand's economy, Southeast Asia's second biggest. Central bank officials and the country's finance minister have said it could affect monetary policy, possibly delaying an expected rate rise.
Thailand's stock market, which had surged about 80 percent over the past 12 months as Asia's third-best performer, fell 3.5 percent on Thursday and investors remained nervous.
"The market will fall again today, mainly due to worries over the impact if the government moves to disperse the protesters," said Chakkrit Charoenmetachai, an analyst with Globlex Securities.
Foreigners, who had bought $1.8 billion in Thai stocks since February 22, were net sellers for the first time in more than six weeks on Thursday after a buying spree spurred by cheap valuations and Thailand's rebounding, export-driven economy.
KNOCKOUT
Bangkok was calm and life went on much as normal except in an upmarket central shopping and hotel district, where the red shirts have camped out, forcing malls to close, since April 3.
"We will tear up all laws," Nattawut Saikua, a "red shirt" leader said late on Thursday, addressing tens of thousands of the mostly rural and working class protesters who have ignored orders to leave Bangkok's main shopping district since Saturday.
He called for marches to 10 undisclosed locations across Bangkok and urged any red shirts who have private vehicles to bring them along, billing the protest as the biggest in nearly four weeks of sporadic anti-government street rallies.
"We will move out to 10 locations at the same time," he said. "We don't want to call it the final day, but if we can score a knockout, we definitely will," he said. "This is all for Abhisit to dissolve parliament."
Thousands of the supporters of former Prime Minister Thaksin Shinawatra, who was ousted in a military coup in 2006 and now lives in self-imposed exile, had gathered in the shopping district by morning. Many had slept there on cardboard boxes.
"This is great. I think we are kicking the government right where it hurts. If they don't give us elections, don't expect us to give them back their extravagant way of life," said Panipa Boonnok, 47, a seamstress from north-eastern Maharasakam province, happy with the shutdown of one of Bangkok's poshest areas.
Arrest warrants have been issued for red shirt leaders, but some experts said arrests would only embolden the protest movement and sharpen its message of double standards.
No convictions were made when the reds' archrivals known as the yellow shirts blockaded Bangkok's international airport for a week in 2008 until a court ousted the pro-Thaksin government.
Kasit Piromya, a vocal yellow-shirt leader in the airport blockade, which stranded hundreds of thousands of travellers, is now foreign minister in Abhisit's government.
Abhisit faces pressure to either compromise and call an election he could easily lose, or launch a crackdown on tens of thousands of protesters that could stir up even more trouble.
Most analysts doubt the authorities will use force to remove the protesters from the shopping area -- a politically risky decision for Abhisit as his 16-month-old coalition government struggles to build support outside Bangkok.
(Additional reporting by Jason Szep and Vithoon Amorn; Writing by Alan Raybould; Editing by David Fox)
