Thai troops mobilized ahead of anti-government protest

BANGKOK (Reuters) - Thailand began mobilizing 50,000 security personnel on Thursday ahead of a mass rally by anti-government protesters who have vowed to bring the capital to a standstill if a new election is not called.

The threat of renewed political turmoil has hit Thai consumer confidence and may force the central bank to keep its interest rates at a record low as the tensions threaten the country's economic recovery from the global downturn.

Supporters of deposed premier Thaksin Shinawatra plan a mass rally this weekend, the latest bid to reclaim power by the mainly rural mass movement that has transformed Thai politics.

Thaksin allies have won two elections since 2001 only to be turfed out of power by royalist elites and military brass, including through a coup in 2006.

The "red shirts," who say Prime Minister Abhisit Vejjajiva is an illegitimate stooge of the country's political establishment and politicized military, will stage protests across the country on Friday, before converging on central Bangkok on Sunday.

"If (the government) hasn't quit by the 15th, we will march all over Bangkok. It'll be the biggest march Bangkok has ever seen," Nattawut Saikua, a "red shirt" leader, told reporters.

They plan to rally for at least seven days in what has been dubbed "a million-man march" and "an operation to halt Bangkok," although analysts doubt the group can mobilize such numbers.

A special law, the Internal Security Act (ISA), came into effect on Thursday, giving the country's top security agency broad powers to intervene if the "red shirts" turns ugly.

Abhisit and his deputy, Suthep Thaugsuban, will be based at a temporary military command center during the protest.

The authorities have warned of potential sabotage from the siege of government offices to arson attempts and bombings, citing the group's last major protest in April 2009, which turned into a riot the "red shirts" blamed on hired government thugs.

"If there is a siege, we would no longer consider it a peaceful protest and immediately take steps to disperse the crowds," Suthep told reporters.

Protesters have insisted their rallies will be peaceful and say the government is playing up the threat of violence to justify a possible crackdown.

CENTRAL BANK CAUTIOUS

Data released on Thursday showed that consumer confidence fell in February after rising for three months as Thais, already concerned by high living costs, worried about the political crisis.

"Consumers are getting more concerned about the political situation, which helped pull all indices lower in February and will remain a worry for now," university economist Sauwanee Thairungroj said.

Thailand's central bank said on Wednesday it was considering raising rates from record lows to return policy to normal settings, but the domestic political crisis made the timing highly uncertain.

It left its key policy rate unchanged at 1.25 percent, as widely expected, and said improvements in the economy meant there was less need to keep its accommodative policy stance, so it would consider adjusting rates to "more normal levels."

But the Bank of Thailand said among the factors it must consider in its policy review would be how the country's five-year political crisis unfolds.

Despite concerns about unrest, Thailand's stock market was in positive territory for a second day on Thursday after four days of losses, closing up 0.71 percent.

Foreign investors continued to buy shares for a 13th straight session, adding a net 1.82 billion baht ($55.7 million), raising their net purchase to 16.46 billion baht so far this year.

However, many offices, businesses, and schools near key protest areas are worried about violence and have decided to either increase security or close temporarily. The start of Thailand's national soccer league season has also been delayed.

"Bangkok is in a jittery mood but it doesn't necessarily reflect what would come to pass," said political scientist Sukhum Nuansakun. "But there is a lot of conjecturing and posturing on both sides which raise concerns about what is next."

The government said it would prevent farm trucks carrying protesters from traveling to Bangkok and warned it would use the ISA to censor or close community radio and television channels that incited violence.

Government ministers have said Thaksin's family members' departure from Thailand this week suggested the former premier might be planning to stir up trouble from exile in Dubai.

Despite Thaksin's removal in a coup, graft conviction and the Supreme Court's confiscation of $1.4 billion of assets he accrued via abuse of power, he remains hugely popular among the rural and urban poor who elected him twice in landslides.

(Additional reporting by Pracha Hariraksapitak; Writing by Ambika Ahuja; Editing by Martin Petty and Jeremy Laurence)