Eight killed as Thai crisis deepens

Thai troops opened fire on rioting anti-government demonstrators today in an attempt to throw a security cordon around their protest site, turning Bangkok's commercial district into a bloody battlefield.

Troops fired tear gas, rubber bullets and live rounds at the protesters who hurled petrol bombs and launched home-made rockets on roads surrounding an area of luxury hotels and shopping malls they have occupied for nearly six weeks, witnesses said.

The violence continued into the night and left the city of 15 million tense, with gunfire and loud blasts heard at several locations around the city where protesters faced off with troops.

A journalist working near a group of demonstrators facing off with troops said five loud blasts and multiple gunshots were heard, followed by loud cheers from the protesters.

Fires blazed in the road as troops fired repeated warning shots at protesters who hurled Molotov cocktails in a commercial area dotted with hotels, banks and Western embassies.

"We hope to return the situation to normal in the next few days," said government spokesman Panitan Wattanayagorn.

The fresh wave of violence follows an assassination attempt on Thursday on a renegade general who had been advising the protesters and was critically wounded during an interview with foreign reporters outside the barricaded encampment.

Eight people have been killed and at least 112 were wounded, including three journalists, since the fighting erupted Thursday night, according to hospitals and witnesses.

A Bangkok-based Canadian journalist working for France 24 television station suffered multiple gun shot wounds but was in stable condition. Two Thai journalists were also shot.

The army said it did not plan a crackdown on Friday on the main protest site where thousands of the red-shirted demonstrators, including women and children, have gathered, protected by medieval-like walls made from tyres and wooden staves soaked in kerosene and topped by razor wire.

Army spokesmen Sansern Kaewkamnerd said there were an estimated 500 armed "terrorists" among the thousands of protesters in the city.

A source close to army chief Anupong Paochinda said more troop reinforcements would be deployed, fearing more protesters would arrive to surround and attack soldiers.

"It's unlikely to end quickly. There will be several skirmishes in the coming days but we are still confident we will get the numbers down and seal the area," the source said.

The turbulence adds to a five-year crisis that pits a royalist urban elite who back Prime Minister Abhisit Vejjajiva against rural and urban poor who say they are disenfranchised and broadly support former premier Thaksin Shinawatra, a graft-convicted populist billionaire ousted in a 2006 coup.

They say the Oxford-educated Abhisit lacks a popular mandate after coming to power in a controversial parliamentary vote.

Underlining concerns that some members of security forces may be sympathetic toward the red shirts, a Thai policeman fired bullets at soldiers while giving cover to a wounded protester, a Reuters witness said. A police spokesman denied that.

The two months of protests have spiralled into a crisis that has killed 34 people, wounded more than 1,400, paralysed parts of Bangkok, scared off investors and squeezed the economy.

Thousands of protesters remained defiant, calling for Abhisit to dissolve parliament immediately.

"Abhisit must take political responsibility. Otherwise, there will be more chaos," one leader, Nattawut Saikua, told Reuters.

Some protest leaders, including the movement's chairman, have not been seen at their 3 sq-km (1.2 sq-mile) encampment for days.

The cost of insuring Thai debt jumped and Thai bond yields fell to a nine-month low as investors rushed to the relative safety of government debt spooked by the latest turn in Thailand's protracted political impasse.

Five-year Thai credit default swaps, used to hedge against debt default, widened by more than 30 basis points - the biggest jump in 15 months - to 142 basis points.

In clashes during the day, protesters set fire to a police bus and truck, a motorbike and tyres as they retreated down a road lined with office towers, hotels, the U.S. ambassador's home and several embassies, which were closed and evacuated.

The latest violence followed the collapse of a reconciliation plan Abhisit proposed last week. An emergency decree was declared in 17 provinces deemed red shirt strongholds, to prevent unrest and to stop convoys of protesters from coming into Bangkok.

Abhisit is under enormous pressure to end the protests, which began with festive rallies on March 12 and descended into Thailand's deadliest political violence in 18 years.

The Thai government stands a good chance of clearing the streets, the Eurasia Group political risk consultancy said.

"But it will not end the polarisation that has led to the current instability ... political volatility will remain a persistent problem for Thailand for the foreseeable future".

It is unclear who shot the renegade major-general, Khattiya Sawasdipol, a suspended army military strategy specialist better known as "Seh Daeng" (Commander Red), the red shirts' security chief.

He underwent brain surgery and was in critical condition.

He had been branded a terrorist by the Thai government, which accused him of involvement in dozens of grenade attacks but denied it was responsible for the shooting.

His shooting sparked a number of skirmishes overnight between rock-throwing protesters and armed security forces.

* Foreign Office advice regarding Thailand for UK citizens