By Pracha Hariraksapitak
BANGKOK (Reuters) - Thailand's military agreed to put troops on the streets of Bangkok Tuesday to keep order after a day of street battles between police and anti-government protesters in which nearly 200 people were injured.
Police said one person was killed by a car bomb near parliament, where protesters involved in a four-month campaign to unseat the government battled riot police in clouds of teargas.
Army spokesman Colonel Sunsern Kaemkumnerd denied rumours of another coup, two years after the military ousted Prime Minister Thaksin Shinawatra in a bloodless putsch.
"We will be unarmed and patrol the streets with police," Sunsern told Reuters.
Shortly after dawn, nearly 70 people were injured when riot police cleared away protesters barricaded outside parliament in an attempt to disrupt the start of the legislative session.
One man lost a foot and another had his leg severed by exploding gas canisters, prompting Deputy Prime Minister Chavalit Yongchaiyudh to take responsibility and quit.
He said he had asked police to exercise restraint.
Health officials said 190 people were treated for gas and other injuries during the worst street violence since bloody clashes between the army and pro-democracy activists in 1992.
"Since this action did not achieve what I planned, I want to show my responsibility for this operation," Chavalit said in his resignation letter.
The loss of the government's top negotiator with the People's Alliance for Democracy (PAD) was a further blow to new Prime Minister Somchai Wongsawat's efforts to end a long-running crisis that has damaged investor confidence in Thailand.
By evening, the PAD controlled several city blocks around parliament, Suan Dusit Rajabhat University and police headquarters. Two policemen were hit by shots fired outside parliament, local media said.
The PAD, an extra-parliamentary coalition of businessmen, academics and activists, accuses Somchai of being a puppet for Thaksin, his brother-in-law, who was ousted in a 2006 coup.
The group argues Thai democracy has been undermined by billionaire Thaksin and his allies, who easily won the last three elections, and has called for a "new politics" that would include a proportion of appointed MPs.
"Overthrow the Thaksin regime. Together we win or lose. We will know it today. We won't give up," PAD leader Anchalee Paireerak said.
CRISIS DEEPENS
Somchai, a soft-spoken former judge, has proved a harder target for the PAD than his predecessor, the abrasive Samak Sundaravej, who stepped down last month after being found guilty of a conflict of interest.
The demonstrators failed to stop Somchai's speech, in which he called for national reconciliation to end a three-year crisis pitting Thaksin and his rural base against rivals in the royalist and military establishment believed to be backing the
PAD.
"This government is determined to tackle economic problems and to listen to all sides to find a solution to end the crisis," Somchai told parliament.
He slipped out through a back gate to a waiting helicopter, which whisked him out of the parliament grounds.
The unrest has hurt investor confidence and distracted policymakers when they should be focussed on slowing economic growth and fallout from the global credit crisis, analysts say.
Citing the protests, traders said the baht fell against the dollar and the stock market tumbled, although in both cases the credit crisis was also a major factor.
The baht was at 34.51 per dollar, down from 34.38 on Monday. The stock market fell 4.2 percent to a five-year low, failing to get a lift like some other bourses from a big Australian rate cut.
Similar street violence last month triggered a two-week state of emergency in Bangkok, but the army refused to enforce it and the measure was withdrawn after it scared away tourists. Somchai told reporters he was not considering such a move this time.
He has tried to open a dialogue with the PAD but there seems little prospect of the movement leaving the prime minister's offices they have occupied since late August, forcing Somchai to run the country from a little-used airport.
The PAD's main draw card has been defence of the throne and 80-year-old King Bhumibol Adulyadej, regarded as semi-divine by many Thais, in the face of what they say is a bid by the Thaksin camp to turn the country into a republic, a charge he denies.
($1=34.41 baht)
(Additional reporting by Nopporn Wong-Anan, Ed Cropley and Adrees Latif; Writing by Darren Schuettler; Editing by Alan Raybould and Sanjeev Miglani)
