By Nopporn Wong-Anan and Bill Tarrant
BANGKOK (Reuters) - Thai anti-government protesters occupying an upmarket shopping area of Bangkok said on Wednesday they were open to talks through a third party to prevent bloody clashes with armed troops threatening to forcibly evict them.
The central bank opted at a meeting to leave interest rates at a record low of 1.25 percent and said it would wait until the political situation became clearer before following countries like India and Malaysia in normalising rates as Asia emerges from the global downturn.
The protesters, supporters of ousted former Prime Minister Thaksin Shinawatra, said a crackdown was imminent and they were now willing to reconsider their demands for a snap election as hundreds of armed troops massed in a nearby business district for a third day.
"We are open to talks to end the crisis, but not with the government," one of the "red shirt" leaders, Jaran Ditapichai, told Reuters in an interview.
Kwanchai Praina said he would propose during a meeting of the group's leaders that they consider a three-month timeframe for Prime Minister Abhisit Vejjajiva to dissolve parliament.
"We believe a crackdown is coming before April 25 and we need to make a compromise," he said.
Talks between Abhisit and "red shirt" leaders late last month collapsed after two rounds, with protesters refusing to accept an offer by the premier to dissolve the house within nine months.
The demonstrators refused to resume dialogue with what they called a "murderous" government after 25 people were killed and more than 800 wounded in April 10 clashes between troops and protesters.
Government spokesman Panitan Watanayagorn said Abhisit would be willing to hold talks with "red shirt" protesters, but only if they agreed not to escalate tensions.
"The prime minister is willing to sit down and talk about this, the conditions for holding an election and amending the constitution," he said. "Our position is the same.
Panitan gave no comment on insistence by protest leaders that they would talk only through a third party.
Their comments came amid boiling tensions in downtown Bangkok. Groups of "red shirts" gathered just 50 metres away from troops guarding the Silom Road commercial area. Some protesters hurled abuse, others set off firecrackers to unnerve soldiers, many armed with loaded M-16 assault rifles and shot guns.
The protest in the capital has shut some shopping malls for almost three weeks, forced luxury hotels to close and scared off tourists.
But the red shirts called off a march in the nearby business district after an army spokesman said troops would use their weapons, with live ammunition, if provoked.
The tougher approach from authorities came after Abhisit handed primary responsibility for security to the army chief. Abhisit said on Tuesday the army would try to take back the intersection, site of Bangkok's glitziest malls and hotels.
DANGEROUS STANDOFF
Analysts say the six-week protest has evolved into a dangerous standoff between the army and a rogue military faction that supports the red shirts and includes retired generals allied with ex-Prime Minister Thaksin, who was toppled in a 2006 coup.
Thai stocks dipped into negative territory, down 0.1 percent at 0750 on Wednesday while other regional bourses were slightly higher.
Stocks jumped 5.4 percent on Tuesday, their biggest rise in 15 months, due to what analysts said was the threat of bloodshed receding and bargain-hunting in one of Asia's cheapest markets. They had fallen 8.23 percent since April 10 clashes.
Some protesters were armed with petrol bombs, grenades and dangerous acids, the army said on Tuesday, threatening a tough response to any attack.
Abhisit has repeatedly rejected demands to call an election he would almost certainly lose, saying the red shirts must be brought under control first.
He came to power in December 2008 in an army-brokered parliamentary vote after the ruling pro-Thaksin party was dissolved for electoral fraud.
Parties allied with Thaksin, a former telecoms tycoon now based in Dubai, have won the past four elections in Thailand based on programmes to help the rural masses.
Both sides want to be in power for a military reshuffle in September. If Thaksin's camp is governing at that time, analysts expect it would bring about major changes by ousting generals allied with Thailand's royalist establishment, a prospect that royalists fear could diminish the power of Thailand's monarchy.
(Writing and additional reporting by Martin Petty, Orathai Sriring and Viparat Jantraprap; Editing by Ron Popeski)
