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BANGKOK, May 22 (Reuters) - Thailand's military chief will press political rivals on Thursday to end a drawn-out power struggle that has polarised the country and battered its economy, after neither side gave ground in a first round of army-brokered talks.
Army chief General Prayuth Chan-ocha declared martial law on Tuesday to prevent more violence between government supporters loyal to ousted former Prime Minister Thaksin Shinawatra and anti-government protesters backing the royalist establishment.
Thailand's gross domestic product contracted 2.1 percent in January-March from the previous three months, adding to fears the country is stumbling into recession.
The army has rejected accusations that martial law amounts to a coup. It has let rival protesters remain on the streets but banned them from marching. It has also clamped down on media, including partisan television channels, and warned people not to spread inflammatory material on social media.
Prayuth has called on the rivals to agree on a compromise that is likely to hinge around the appointment of an interim prime minister, political reforms and the timing of an election.
"I want to see every problem settled within this forum before I retire," the Nation newspaper quoted Prayuth as telling the rivals at a first round of talks on Wednesday. He is due to step down in September. "I don't want my juniors to take up this job."
Wednesday's talks ended inconclusively with neither side backing down from their entrenched positions, participants said. Another session is scheduled for Thursday.
Former telecommunications tycoon Thaksin has lived in self-exile since 2008 to avoid a jail term for graft but still commands the loyalty of legions of rural and urban poor and exerts a huge influence over politics, most recently through a government run by his sister, Yingluck Shinawatra.
Yingluck was forced to step down as premier by a court two weeks ago, but her caretaker government remains in power, despite the declaration of martial law and six months of sometimes violent protests aimed at ousting it.
The protesters say Thaksin is a corrupt crony capitalist who commandeered Thailand's fragile democracy, using taxpayers' money to buy votes with populist giveaways.
They want a "neutral" interim prime minister to oversee electoral reforms aimed at ridding the country of the Shinawatra family's political influence.
Public sector workers have joined the campaign to get the government out and began a strike on Thursday, although one union leader said there would be no disruption to utilities, transport or other public services in Bangkok. (Writing by Robert Birsel; Editing by Alan Raybould and Alex Richardson)