Thai "yellow shirts" rally against Thaksin amnesty moves

BANGKOK (Reuters) - Thailand's "yellow shirts", who shut down Bangkok's airports during protests in 2008, rallied on Wednesday against a planned national reconciliation bill seen by some as a way of letting ex-premier Thaksin Shinawatra return home from exile.

More than 3,500 people gathered at the Royal Plaza in central Bangkok before marching in the late afternoon to parliament, where the bill could be debated this week.

"Some of the demonstrators will sleep overnight outside parliament but whether or not this rally is extended depends if the government concedes to our demand to drop the bill," said Pipob Thongchai, a protest leader.

Rally leaders used a truck as a stage and took turns to denounce the government's national unity proposals as police stood guard behind the gates of parliament.

The yellow shirt activists are drawn broadly from the ranks of the urban middle class and support the traditional royalist-military elite.

Their rivalry with the mostly lower-income, red-shirted supporters of Thaksin has dominated politics and to a great extent divided the country since the populist former telecoms tycoon was ousted in a military coup in 2006.

Wednesday's protest brought back memories of protracted rallies by the yellow shirts, formally known as the People's Alliance for Democracy (PAD), that helped undermine Thaksin in 2006, leading to his overthrow in September of that year.

They held crippling rallies in 2008 against a pro-Thaksin government, which was eventually disbanded by a court, leading to the rise of Thaksin's "red shirt" supporters, who closed down parts of central Bangkok for seven weeks in 2010.

ECONOMIC RISK

Financial market investors are becoming concerned about the potential for unrest and Bank of Thailand Governor Prasarn Trairatvorakul spoke about those worries on Wednesday.

"It's possible that politics will be a risk to the economy, depending on the severity of the situation. But over the past five years, society and business have been immune to it to some extent," Prasarn told reporters.

The protest comes two weeks after the red shirts held a demonstration calling on Prime Minister Yingluck Shinawatra, Thaksin's sister, to bring to account those responsible for the army's bloody suppression of their 2010 rally.

Several reconciliation bills have been drawn up. The most notable is the work of Sonthi Boonyaratglin, a retired army general who led the coup against Thaksin and is now an opposition lawmaker. He has not explained his motives.

His bill would grant amnesty to those found guilty of political offences or related charges since 2005, a year that marked the beginning of a polarising, at times violent, political conflict.

The proposals are highly contentious and a discussion in parliament about when to debate the proposed bill descended into chaos when police poured into the chamber after a member of the ruling party tried to assault an opposition member.

Thaksin is widely believed to be pulling the strings of government from his base in Dubai. He wants to return home but, without pardon or amnesty, he would have to serve prison time after being found guilty in absentia 2008 of graft.

(Reporting by Aukkarapon Niyomyat and Pracha Hariraksapitak; Writing by Amy Sawitta Lefevre; Editing by Alan Raybould and Robert Birsel)