By Nopporn Wong-Anan and Bill Tarrant
BANGKOK (Reuters) - "Red shirt" protesters offered a compromise to the Thai government on Friday a day after a series of grenade attacks in Bangkok, saying they would accept dissolution of parliament in 30 days rather than immediately.
They also called on Prime Minister Abhisit Vejjajiva to begin an independent probe into a deadly clash between protesters and the army on April 10 that killed 25 people, and said troops must be withdrawn from areas around their protest site.
"The government must stop all threats against our movement," Weng Tojirakarn, a red shirt leader, said from a stage at their protest site in the heart of Bangkok's commercial district.
The new demands came shortly after army chief Anupong Paochinda told a meeting of his commanders there would be no crackdown on the protesters camped out in the capital because it would do more harm than good.
Five grenade attacks in Bangkok's bustling business district on Thursday night killed one person and wounded more than 80 people, fuelling concern over the escalating crisis and putting the city of 15 million people on edge.
Thousands of red-shirted supporters of ousted premier Thaksin Shinawatra remain in a fortified encampment at a ritzy shopping area of central Bangkok, vowing to stay until Vejjajiva dissolves parliament for new elections.
The grenade blasts near the racy bars of Patpong came 12 days after a failed army attempt to evict protesters from a rally site, which killed 25 and injured over 800 in the country's worst street violence in 18 years.
The government's Erawan Emergency Centre put the toll at 1 dead and 88 wounded, including an American, Australian, Indonesian and a Japanese.
'FULL SCALE WAR'
The violence and deepening political divide has spurred talk of civil war in Southeast Asia's second-biggest economy.
"The government is far from controlling the situation," Thailand's largest broker, Kim Eng Securities, said in a note to clients. "Reds have denied their involvement. But if they are indeed behind the (grenade) attacks, these powerful explosions right in the army-barricaded area demonstrate they are well-prepared to wage a full-scale war."
The central bank said on Wednesday the crisis was hitting confidence, tourism, private consumption and investment, although exports, which are crucial to economic growth, have not been affected so far by the unrest.
Britain, Australia and the United States have warned their citizens to reconsider travel plans to Thailand, where tourism accounts for 6 percent of the economy.
Indonesian Foreign Minister Marty Natalegawa said on Friday he had called his Thai counterpart, Kasit Piromya, to offer "any assistance" for a dialogue between the conflicting parties.
He said Indonesia was alert to the possibility that the Thai troubles could have a contagious impact in the region.
The 1997 Asian financial crisis began in Thailand with a run on the local baht currency and spread to the Philippines, Malaysia, Indonesia and South Korea.
U.N. Secretary-General Ban Ki-moon appealed to both protesters and the Thai authorities to avoid further violence. U.S. State Department spokesman Philip Crowley also urged both sides to show restraint.
FUEL ON BARRICADE
On Friday morning, police demanded the "red shirts" dismantle their barricade of tyres, bamboo poles and chunks of concrete near the entrance to Silom Road and the business district. They pulled back after red shirts poured fuel on the barricade, but remained on alert in the area. Troops are also stationed there.
Analysts say the protests are radically different from any other period of unrest in Thailand's polarising five-year political crisis -- and arguably in modern Thai history, pushing the nation close to an undeclared civil war.
That is reflected in a split in the army. One faction supports the protesters, including retired generals allied with Thaksin, who was ousted in a 2006 coup and later sentenced in absentia to two years in prison for corruption.
The divide has also split the citizenry into two increasingly angry groups. About 3,000 people from the pro-government "multi-colours" group held a peaceful demonstration near Government House on Friday, saying they were fed up with the disruption and loss of business and livelihoods the protests have caused.
The red shirts say British-born and Oxford-educated Abhisit came to power illegitimately in December 2008, heading a coalition the military cobbled together after courts dissolved a pro-Thaksin party that led the previous government.
(Additional reporting by Martin Petty. Editing by Jason Szep and Sanjeev Miglani)
