BANGKOK, April 19 (Reuters) - Thai soldiers armed with machine guns guarded Bangkok's business district on Monday to prevent thousands of anti-government protesters and protect a bank linked to a royal adviser, raising fears of fresh violence.
An army spokesman said on Monday troops could use force to stop tens of thousands of the red-shirted supporters of ousted premier Thaksin Shinawatra from going ahead with plans to march to the Silom Road office district from a luxury shopping area they have occupied for more than two weeks.
'The operations will start from soft to heavy measures,' said army spokesman Colonel Sansern Kaewkamnerd.
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 twice-elected and now fugitive former premier Thaksin.
As tensions simmered, the 60-year-old, telecoms billionaire urged Prime Minister Abhisit Vejjajiva to call snap elections to end the impasse. If Abhisit resists, there would be further crackdowns and possibly a military coup, Thaksin said.
'The political crisis must be resolved by political means, and the only way is for Abhisit to dissolve parliament and call a snap election,' Thaksin told Reuters in an telephone interview during a brief stopover in Brunei.
Hundreds of troops converged in the Silom Road area before dawn, erecting barbed wire around the headquarters of Bangkok Bank, Thailand's biggest bank and a red shirt target.
Bangkok Bank's honorary adviser, Prem Tinsulanonda, is accused of masterminding a 2006 coup that toppled Thaksin. The top aide to the Thai monarch is also seen by the mostly poor 'red shirts' as a symbol of an unelected elite meddling in politics.
The deployment of troops comes three days after army chief General Anupong Paochinda was appointed head of national security in the wake of several failed security operations, including a clash last week that killed 25 people without ending the crisis.
On Silom Road, also home to Bangkok's racy Patpong district of go-go bars, soldiers stood behind barbed wire and metal barricades facing hundreds of protesters, who had stockpiled poles and clubs behind their lines.
CREDIT-RATING DOWNGRADE
The protests have battered tourism and triggered a downgrade of Thailand's credit-rating outlook on Monday. The stock market lost 1.3 percent, in line with falls in other regional markets, after plunging 6.8 percent last week.
Bond yields fell as investors switched to the relative safety of government debt and bet the Bank of Thailand would not raise interest rates on Wednesday because political unrest could set back the economic recovery.
Over the past year Thaksin has enlisted powerful allies to buttress his red shirts, including former army chief Chavalit Yongchaiyudh, who government sources said led other current and former generals in providing heavy arms to the red shirts in their bloody April 10 clash with troops.
Chavalit, chairman of the red shirts' parliamentary wing, the Puea Thai Party, has denied involvement in the violence.
He said on Monday he was seeking an audience with Thailand's ailing 82-year-old King Bhumibol Adulyadej to try to end the standoff, a move seen as an attempt to draw the revered king into the crisis. Most doubted the king would meet with him.
'Without His Majesty's graciousness, I am not sure about the losses that will arise in the next one or two days,' he said, referring to possible bloodshed.
Adding to the combustible mix, rival 'yellow shirt' protesters threatened a massive rally if the government failed to act within seven days, putting the deeply-divided nation on a collision course not seen in recent history.
Groups of yellow shirts cheered the troops on Monday in the Silom Rd area, some handing flowers to the soldiers.
Red shirt leader Nattawut Saikua was noncommittal on whether a rally would actually take place on Tuesday, when he said a 'non-stop flow' of demonstrators would pour into the city.
The troop deployment in the Silom area was initially intended to break up the main protest, but the army top brass changed tactics at the last minute, Nattawut told reporters.
'The watermelon soldiers tipped us off that there was supposed to be a crackdown, but it was aborted when they saw how many of us there were,' Nattawut said. Some rank-and-file soldiers in green uniforms have been dubbed 'watermelons' -- green on the outside with a red core.
Elements of the police are also known to be close to Thaksin, himself a former policeman, who was ousted in a 2006 bloodless coup and later convicted of graft.
The red shirts accuse Thailand's elite of conspiring to topple him, and of backing the 'yellow shirts' -- representing royalists, a business elite, aristocrats and the urban middle class -- in its bid to force Thaksin and his allies out of power.
Abhisit rebuffs claims his government is illegitimate and has refused to step down and call immediate elections.
(Writing by Jason Szep; Additional reporting by Viparat Jantraprap and Adrees Latif; Editing by Bill Tarrant) Keywords: THAILAND/ (Bangkok Newsroom; +66 2 637 5610) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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