The "red shirt" uprising showed the first signs of spreading beyond Bangkok to the protesters' stronghold in the northeast after they blocked a train carrying troops and military vehicles.
Tens of thousands of red-shirted supporters of former prime minister Thaksin Shinawatra have fortified their redoubt in a Bangkok commercial district with home-made barricades, expecting the army to evict them any time.
"We've heard from insiders in the government that April 26 is their deadline," Kwanchai Sarakam, 57, a red shirt leader from the northeast told Reuters.
Neither side shows any sign of backing down after the army's chaotic attempt to evict protesters from another site on April 10 that led to the deaths of 25 people and wounded more than 800.
Red shirt leaders say another such attempt would be futile. They say they will only leave Bangkok when the prime minister announces a dissolution of parliament and early elections.
"I'm sending a signal (by remaining at the site and fortifying it) that I want to see their cards," said Nattawut Saikuar, one of the three top red shirt leaders, on Wednesday. "You cannot issue an order because the soldiers won't listen," he added, citing last Friday's bungled attempt to arrest red shirt leaders as an example.
The central bank left interest rates at a record low on Wednesday, noting political risks were "affecting confidence, tourism, private consumption and investment.” Any attempt to disperse the protesters risks heavy casualties and the prospect of clashes spilling into nearby high-end residential areas. It may also lead the red shirts to step up action elsewhere in the country, particularly in their strongholds in the north and northeast where there has been little unrest so far in the six-week campaign.
"The risk for Abhisit is that even a successful dispersal, while assuring the near-term survival of his government, will not in any way ease - and in fact may even worsen - the disenchantment of the red-shirts," risk consultancy Eurasia Group said in a note. "In that case, their next rally, and the next round of volatility, will only be a matter of time."
Thai media reported that a "multi-colored" pro-government group planned a demonstration of up to 100,000 people on Friday demanding a dispersal of the red shirts, splitting the capital into opposing groups.
This groups includes office workers, shopkeepers, the middle class and members of the pro-government "yellow shirts' who staged their own parlyzing protests in Bangkok two years ago to force the ouster of a Thaksin-allied government.
About 200 red shirt protesters rallied in front of the regional headquarters of the United Nations in Bangkok on Thursday requesting peacekeepers be deployed to provide security. Police made no move to stop them.
Some red shirt leaders suggested on Wednesday they might consider a three-month timeframe for Prime Minister Abhisit Vejjajiva to dissolve Parliament and call elections.
But the movement is led by a 22-member committee that often sends mixed signals on its positions. They all agree, however, a crackdown is imminent and they are preparing for battle.
The army spokesman said around 900 fully armed troops on motorcycles would be deployed around the red shirt rally site at the Rachaprasong intersection to keep them going elsewhere, and checkpoints have been strengthened in Bangkok to stop red shirt reinforcements from coming into the capital.
The red shirts have fortified entrances to their rally site in an upmarket shopping district with barricades made of tires, chunks of concrete and bamboo staves, forcing posh malls and some luxury hotels to close their doors.
At one end of their sprawling encampment, leading to the Silom business district, anti-government protesters atop their barricade faced off against several hundred "multi-coloured" demonstrators on Wednesday night throwing bottles and rocks before riot police got between them.
About 60,000 troops have been deployed in the capital and can use live ammunition if necessary for self-defense, the Bangkok Post newspaper quoted security officials as saying.
In the province of Khon Kaen, about 400 km from Bangkok, red shirts agreed on Thursday to let the military train proceed - if it takes along 10 of them to make sure the train goes to its intended destination in southern Thailand.
Talks between Abhisit and the protesters collapsed last month when the red shirts rejected his offer to dissolve parliament within nine months - a year early.
Analysts say the protests are radically different from other periods of unrest in Thailand's five-year political crisis, pushing the country close to an undeclared civil war.
The demonstrations have evolved into a dangerous standoff between the army and a rogue military faction that supports the protesters and includes retired generals allied with twice-elected and now fugitive former premier Thaksin.
Despite the turmoil, some big foreign manufacturers - most of them with plants well away from the capital - said they are maintaining their investment policies.
Thailand's exports jumped 41 pct, year-on-year in March, compared to 23 percent in February, indicating the protests have yet to hit the wider economy significantly.
