Protesters torched at least 17 buildings, including the Thai stock exchange and Central World, Southeast Asia's second-biggest department store complex and operated by Central Pattana PCL. The store was gutted by fire and looked like it may collapse, said a Reuters witness.
The unrest is now the "most widespread and most uncontrollable" political violence Thailand has ever seen, said Charnvit Kasetsiri, a prominent political historian.
It remained unclear whether the continued rioting, after the protest leaders surrendered, was a last outpouring of anger by anti-government forces, which would give Thai finance markets a reprieve, or the start of more intense, widespread fighting.
"The situation is worse than expected now and it's very difficult to stop," said Kavee Chukitsakem, head of research, Kasikorn Securities. "After the red shirt leaders surrendered, things were out of control. It's like insects flying around from one place to another, causing irritation."
Thai Prime Minister Abhisit Vejjajiva imposed a curfew in Bangkok, a city of 15 million people, today from 8pm until 6am tomorrow.
Travellers heading overseas or returning to Thailand during the curfew will need to show their passports to security forces to get through checkpoints.
A news blackout has also been imposed. "It's going to be hard to quell this, and tonight is going to be very ominous with the media taken off air and the curfew in place. There will be chaos and a widespread crackdown can be expected," said Charnvit.
Authorities have ordered medical and disaster teams to be on standby as troops continue operations overnight.
Troops in armoured vehicles and firing semi-automatic weapons advanced on the protesters' camp this morning in a bloody operation which led to several top protest leaders surrendering.
But that didn't stop the unrest, which has descended into urban warfare, killing 42 people and wounding 336 in the past six days. More than 68 have been killed and more than 1,700 people wounded since the demonstrations began in mid-March.
Minutes after the protest leaders surrendered, three grenades exploded outside the main protest site, badly wounding two soldiers and a foreign journalist, a Reuters witness said.
Several media organisations including the Bangkok Post and the Nation newspapers evacuated their office after a threat from protesters accusing them of biased reporting.
Power was lost in typically bustling Sukhumvit Road district, an area packed with tourists and high-end residential complexes, just hours after the army said the situation involving thousands of anti-government protesters was under control.
Many tourists remained holed up in their hotels unable to safely leave the buildings as sporadic violence erupted.
About 100 employees of the TV station Channel 3 were trapped on the roof of the highrise when it came under attack, but most were rescued by helicopters, local media said.
Violence also spread to northeast Thailand, a red shirt stronghold, where protesters stormed a town hall complex in the city of Udon Thani, setting a building ablaze, and torched a second town hall in Khon Kaen.
Unrest was reported in three other provinces.
Three journalists were among 50 people wounded in Bangkok today, and one Western journalist, identified as an Italian, was killed.
Troops and armoured vehicles broke through the protesters' three-metre-high barricades of tyres and bamboo, and fired tear gas and automatic rifle-fire at the protesters.
Two bodies were found on Ratchadamri Road, which leads to the main protest site after troops followed the army vehicle into the encampment, a Reuters witness said. They appeared to have been shot. The red shirts fired back, witnesses said.
The mostly rural and urban poor protesters broadly support former Prime Minister Thaksin Shinawatra, a graft-convicted populist billionaire ousted in a 2006 coup and living in self-imposed exile to avoid jail.
Thaksin raised the spectre of insurrection in a telephone interview with Reuters today.
"There is a theory saying a military crackdown can spread resentment and these resentful people will become guerrillas," Thaksin said. He declined to say where he was speaking from.
The military offensive came a day after the collapse of a proposal for talks aimed at ending five days of chaotic street fighting that descended into urban warfare.
The red shirts accuse the British-born, Abhisit of lacking a popular mandate after coming to power in a controversial parliamentary vote in 2008 with tacit backing from the military. They have demanded immediate elections.
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