Thai protest winds down peacefully

By Martin Petty and John Ruwitch

BANGKOK (Reuters) - Thai anti-government protesters in Bangkok surrendered on Tuesday, giving the harried prime minister some breathing space to try to fix the worsening economy.

"We have to stop because we need to look after the lives of our supporters," said Jatuporn Prompan, one of the leaders of the red-shirted protesters loyal to former premier Thaksin Shinawatra who still commands widespread loyalty among the rural poor.

The government extended the New Year's holiday for the rest of the week for "public safety" in case the red shirts regroup in Thaksin strongholds and come back to the capital, government spokesman Panitan Wattanayagorn told Reuters.

"Overall, I don't think this is the end of the story," said Danny Richards, senior economist at the Economist Intelligence Unit in London. "This crisis still has a long way to go.

"But in terms of this protest in itself, Abhisit has managed to remain in control, and I think you'd have to say he has avoided a major crisis of confidence in his government."

Police said Arrest warrants have been issued for Thaksin and 13 other pro-Thaksin leaders in the United Front for Democracy against Dictatorship (UDD) for violating a state of emergency, which forbids more than five people for political reasons.

Four of them were already in custody.

Thailand's intractable political divide broadly pits royalists, the military and the urban middle-class against the rural poor loyal to Thaksin.