Hundreds of Thai riot police confronted anti-government protesters at a barricade in Bangkok's business district today, a day after grenade attacks in the area killed three people, but later pulled back without violence.
Police demanded that the "red shirts" dismantle the barrier, Thai television said, but the protesters made no move to do so.
The police later pulled back and the protesters also withdrew to the camp they have set up behind the barrier on the edge of the Silom business district.
The government said the grenades, which also wounded 75 people, were fired late yesterday from the red shirt protest area. Leaders of the red shirts, who have been demonstrating in Bangkok for six weeks seeking new elections, denied they were to blame.
The grenade blasts - close to the night market and racy bars of the Patpong entertainment area - came 12 days after clashes between troops and protesters killed 25 people and wounded more than 800 in the country's worst street violence in 18 years.
The central bank said on Wednesday that the political crisis was affecting confidence, tourism, private consumption and investment, although exports, which are crucial to economic growth, have been little affected by the unrest.
The red shirts, supporters of ousted former prime minister Thaksin Shinawatra, have also been occupying an upmarket shopping area for three weeks.
Any attempt to remove them risks heavy casualties and the prospect of clashes spilling into high-end residential areas. Deputy Prime Minister Suthep Thaugsuban said there would be no crackdown last night because women and children were in the area.
Adding to the volatile mix, a new "multi-coloured" group is planning a demonstration of 50,000 people in Bangkok's old quarter today to demand the red shirts end their rally. Demonstrations by this group have increased the tension in the Silom business district this week.
"There are now two conflicting groups and this kind of confrontation could create havoc and turmoil," said Somjai Phagaphasvivat, a politics professor at Thammasat University.
Under growing pressure to restore order, the army warned the red shirts yesterday their "days are numbered."
Leaders of the red-shirted supporters of twice-elected and now fugitive Mr Thaksin say they will only leave when the military-backed government announces an early election.
They claim Prime Minister Abhisit Vejjajiva came to power illegitimately in late 2008, heading a coalition the military cobbled together after courts dissolved a pro-Thaksin party that led the previous government.
Analysts say the protests are radically different to any other period of unrest in Thailand's polarising five-year political crisis - and arguably in modern Thai history, pushing the nation close to an undeclared civil war.
They have evolved into a dangerous standoff between the army and a rogue military faction that supports the protesters and includes retired generals allied with Mr Thaksin, who was ousted in a 2006 coup and later sentenced in absentia to two years in prison for breaching conflict-of-interest laws.
Reuters