Thai army cracks down on protesters

BANGKOK (Reuters) - Thai troops fired assault rifles at crowds of anti-government protesters in downtown Bangkok on Monday and demonstrators fought back with firebombs and rocks, propelling Thailand deeper into political crisis.

At about 5:20 p.m. (11:20 a.m. British time), a Reuters reporter saw soldiers advance into an area held by protesters near Government House in what appeared to be a final push to end demonstrations that have undermined confidence in a country still reeling from political chaos last year and the global financial crisis.

Hospital authorities said so far on Monday at least 67 people were injured, four from gunshots, including two soldiers.

The clashes came two days after protesters forced cancellation of a high-profile Asian summit, a big embarrassment for Thai Prime Minister Abhisit Vejjajiva, whom they have been trying to oust. Abhisit took office only in December.

"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.

Monday's violence started before dawn and almost all of it occurred near one of the city's key traffic hubs, the Din Daeng junction, which "red shirt" demonstrators had blockaded.

Troops moved in with water cannon after protesters loyal to former Prime Minister Thaksin Shinawatra poured some kind of fuel on the road, threatening to set it ablaze if soldiers acted.

They eventually pushed the protesters out of the junction, detaining several and stripping them of their red shirts.

It was the first show of strength since Abhisit declared a state of emergency in Bangkok on Sunday.

General Songkitti Chakabakr, Thailand's top military commander, said in a televised statement the committee charged with restoring order would strive "through every peaceful means" to bring things back to normal as soon as possible.

The committee, which he leads, would try not to use force, but reserved the right to use arms for self defence and to protect individual rights of fellow Thais, he said.

INTRACTABLE POLITICAL DIVIDE

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.

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.

The political strife died down for awhile after Abhisit came to office in December 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 city 150 kms (90 miles) south of Bangkok. Ahisit'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 street and smoke from burning tyres rising over the city of some 12 million, a political solution appears as distant as ever.

Thaksin, in his nightly phone call to his supporters on Sunday, told the red shirts at Government House he could return from exile to lead a people's uprising if there was a coup.

The flare-up came at the start of the Thai New Year holiday, and even as soldiers and protesters battled in the streets, in other parts of town squealing children and shrieking adults blasted each other with waterguns to celebrate the three-day Songkran Festival.

COUPS APLENTY

Thailand has seen 18 coups since 1932 and another is certainly a possibility if there is blood in the streets. But the military is loath to intervene since that would neither stop the protests nor cure the political divide, analysts say.

Several thousand "red shirts" were still encamped at Government House, about 4 km (2.5 miles) from Din Daeng junction, where they have been demonstrating for nearly three weeks.

Their numbers have shrunk considerably from around 40,000 on Sunday night and busloads were seen leaving to reinforce the Din Daeng blockade, Reuters reporters at the scene said.

Abhisit appeared on television on Monday, urging people to leave Government House and guaranteeing their safety.

The chaos in the capital will deal another blow to tourism, one of Thailand's biggest foreign exchange earners. Several countries have already warned their citizens against travel.

"What we'll watch now is to see how unstable the situation becomes, and try to figure out what the lasting impact will be, mainly on investment in the economy, both domestic and foreign," said Thomas Byrne, senior vice president and regional credit officer for Moody's in Singapore.

(Additional reporting by Vithoon Amorn, Kittipong Soonprasert, Panarat Thepgumpanat and Andrew Marshall; Writing by John Ruwitch and Bill Tarrant; Editing by Alan Raybould)