Thai PM imposes emergency rule after street battle

"If we thought we could use police and soldiers to get them out with a peaceful conclusion, we would do it. But we think that that would create more problems," he told a news conference after a man died in clashes between pro and anti-government protesters.

Under the sweeping emergency powers announced by Prime Minister Samak Sundaravej, all public gatherings in the capital are banned as well as media reports that "undermined public security". However, no curfew was imposed on the city of 10 million.

Samak, who vowed never to bow to a street campaign to push him from power, said the security action would be restrained and not last more than a few days.

"I did this to douse the fire, not to cause a fire," he told a news conference at a military headquarters.

Although the deployment of troops will come as welcome relief to the overstretched police, it raises the specter of an army seizure of power less than two years after the military kicked out then Prime Minister Thaksin Shinawatra.

After a meeting with top military brass to discuss Bangkok security, Anupong said another coup would resolve nothing.

Samak faced a new threat on Tuesday when the Election Commission recommended his ruling People Power Party (PPP) be disbanded for vote buying in December's general election.

It could be months before the courts give their ruling, but if they agree with the Commission, Samak and other top party leaders could be banned from politics for five years.

At Government House, leaders of the protest movement that has occupied Samak's official compound for the past week vowed to stay behind their barricades of razor wire and car tires.

"There are not enough jails to put us all into," Chamlong Srimuang, one of the leaders of the anti-government People's Alliance for Democracy (PAD), told thousands of cheering supporters inside the compound.

He called for more people to join the protest against Samak, whom the PAD accuses of being an illegitimate proxy for Thaksin. His rallying cry will have gone out across the country via the PAD's radio and satellite television channels.

TRAVEL WARNINGS
Some schools and shops were shut in Bangkok but traffic flowed, with no major security presence or tanks in the streets.

The airport, the main gateway for millions of tourists visiting one of Asia's top holiday destinations, remained open. But tourism, a major employer, could take a short-term hit as Australia, South Korea and Singapore issued travel warnings, with others likely to follow.

"We ask those who plan trips to Thailand to please avoid travel there until the situation stabilizes," South Korea's foreign ministry said from Seoul.

The Thai baht hit a one-year low of 34.47 per dollar and the stock market was down 1.8 percent at 0530 GMT, falling further than other, slightly weaker Asian markets. It has lost around 24 percent since the protests began in May.

"Announcing a state of emergency is proper and timely. But if you ask me if this is the beginning of the end. No, it isn't," said Puwadol Lapudomsuk, a senior strategist at Asia Plus Securities, adding he expected a gradual fall, not panic selling.

Rating agency Standard & Poor's told Reuters the turmoil could deter foreign investment and that an escalation of violence could lead it to cut Thailand's rating outlook to negative from stable.

SOLDIERS SENT IN
At least one man was killed and 34 hurt in overnight clashes between the PAD and pro-government supporters, the worst outbreak of violence since the PAD launched its street campaign.

Around 400 soldiers armed with batons and shields were sent to back up police struggling to contain the skirmishes. Several shots were fired, but it was not clear by whom.

After the clashes, the street was strewn with rocks and broken glass, and pools of blood were on the pavement.

Supporters of Samak later withdrew from positions near the PAD barricades to comply with the emergency order.

Samak's announcement of emergency rule blamed certain people, whom he did not name, for "wreaking havoc" and said their actions were undermining the economy and national unity.

The PAD, a group of right-wing businessmen and activists whose 2006 street campaign contributed to the coup against Thaksin, says that Samak is an illegitimate proxy for the former telecoms billionaire, now in exile in London.

The PAD also paints itself as a guardian of revered King Bhumibol Adulyadej against a supposed Thaksin campaign to turn Thailand into a republic, a charge denied by both Thaksin and the government.