By Nopporn Wong-Annan and David Chance
BANGKOK (Reuters) - Thailand's anti-government protesters said Wednesday they would all congregate at a single site in a ritzy Bangkok shopping district, preparing for a "final battleground" with the authorities.
The decision came after the death toll from Thailand's bloodiest political violence since 1992 rose by two -- a protester and a soldier -- to 23, according to medical authorities, and as the prospect of further violence looked set to clip growth in Southeast Asia's second-largest economy.
"We will use the Rachaprasong areas as the final battleground to oust the government," protest leader Nattawut Saikua told reporters Wednesday. "There will be no more negotiations, no more talks."
That means the "red shirts," who want Prime Minister Abhisit Vejjajiva to step down immediately ahead of new elections, will now consolidate their forces in the heart of the capital, rather than being spread out in two places.
Bangkok was peaceful Wednesday during the second day of the country's three-day new year holiday as protesters called off a planned a march on an army base that Abhisit has taken shelter during the month-long campaign to topple his government.
Tens of thousands of revellers took to the streets of Bangkok Tuesday night for the Songkran holiday, dousing each other with water and flour in traditional celebrations.
However, tensions could flare again when the holiday ends and financial markets are likely to see renewed selling when they reopen Friday as the protests ramp up again, although the red shirts said they will decide their plans Thursday.
Abhisit, who most political analysts had predicted would 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 dissolve parliament 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 the charges are upheld, 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.
HIT TO BANGKOK ECONOMY
The tense confrontation in the capital, which shows few signs of ending soon, could dampen economic growth as tourists stay away and as the prospect of further violence hits consumer confidence, economists say.
Deputy Prime Minister Suthep Thuagsuban ordered police to hunt for "terrorists" the government blames for the killings in Bangkok's old quarter Saturday.
Even as Bangkok and the country partied Tuesday, the economic impact of the clashes that also injured more than 800 has already started to show with charter flights cancelled.
Without an immediate resolution, Thailand's tourism industry, which accounts for 6 percent of gross domestic product (GDP) and directly employs 1.8 million people, could be hit further.
Investment bank Morgan Stanley calculates that economic growth this year could be reduced by 0.2 percentage points due to the impact on tourism.
"However, the impact on Thai GDP will lie more in the effect on Bangkok: we estimate that the slowdown in Bangkok's GDP could take 0.1 percentage points to 0.6 percentage points off Thai GDP growth," economist Deyi Tan said in a research report.
The unexpected violence at the weekend has prompted investors to desert Thailand. The stock market fell by over 3 percent Monday and credit ratings agencies have warned the economy could be damaged.
(Writing by David Chance; Editing by Bill Tarrant)
