Thailand extends security law for protests

BANGKOK (Reuters) - Thailand extended a tough security law on Tuesday for another week after opposition protest leaders called for a "historic rally" to paralyse Bangkok in a bid to force elections that appears no closer to succeeding.

Tens of thousands of protesters remained at their open-air encampment in their trademark red shirts, calling for Prime Minister Abhisit Vejjajiva to dissolve parliament in a rally that has now entered its second week.

Their leaders, allied with toppled premier Thaksin Shinawatra, have not revealed details of their plans for the rally on Saturday and whether the demonstrators will fan out across the city as at least 65,000 of them did at the weekend.

"The cabinet sees that there is still a need to be vigilant," Abhisit told reporters, adding the law has been extended until March 30 for Bangkok and some surrounding districts.

The rally has so far been orderly. Most analysts say the protesters are likely to struggle to maintain momentum and expect Abhisit to prevail because of the support he enjoys from the majority of parliament, the powerful military and Bangkok elite.

These factors have encouraged continued fund flows into Thai assets, pushing Thai stocks to around a 20-month on Tuesday, drawn by cheap share prices and high dividend yields.

"Foreign funds should continue to flow into the market. Thai politics is still not a big worry," Thanachart Securities said in a note to clients. The bourse was up 0.88 percent at 0740.

Abhisit has refused to call early elections, which the Thaksin-allied Puea Thai Party would be well placed to win. That scenario presents a risk to investors and raises the chance of another judicial or military intervention to keep Thaksin and his allies out of the corridors of power [ID:nSGE6230IX]. Abhisit insists the deep political divisions would undermine any chance of peaceful polls if an election were held now. His critics say he and his backers are clinging on to power.

Puea Thai on Tuesday followed the "red shirts" in calling for parliamentary dissolution. Members planned to meet partners in Abhisit's uneasy coalition to discuss a political solution, said party chairman Chavalit Yongchaiyudh.

Key coalition partners reiterated their stance on Tuesday that they have no plan to break away from the alliance amid speculation that Puea Thai would try to bring them on board.

The Internal Security Act gives the country's powerful military-led security agency, the Internal Security Operations Command, an option to impose curfews, operate checkpoints and restricts movements if protests turn violent.

Political analysts say the longer the protesters are on the streets, the greater the risk a frustrated minority could break ranks and spark sporadic unrest, as they did in April 2008, denting Thailand's image as a safe tourist destination.

Such concerns were highlighted by two blasts heard near the Ministry of Public Health where the cabinet was meeting under tight security. The normal venue, Government House, has been avoided because of the protests. Police have not confirmed the cause of the explosions or if they were related to the protests.

On Tuesday, the red shirts also rode on about 1,000 motorcycles around Bangkok to give out leaflets, urging city residents to join the rally.

Abhisit has not entered his office, his private home, or the parliament since March 12, instead working out of a military base which also doubles as a safe house.

(Writing by Ambika Ahuja; Additional Reporting by Viparat Jantraprapaweth; Editing by Martin Petty)

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