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Thai PM rebuffs demands for dissolving parliament

BANGKOK (Reuters) - Thai Prime Minister Abhisit Vejjajiva on Monday rebuffed a demand by “red shirt” leaders to dissolve parliament in 15 days, dashing hopes of an end to an intensifying political crisis and two weeks of protests.

Abhisit, who enjoys backing of the military and Thailand’s establishment elite, said immediate dissolution of parliament was “impossible” but that he was willing to discuss holding elections before his term expires at the end of next year.

“This is the best approach for the country right now and we can talk more about it, but if you insist it has to be 15 days, then I don’t think we’re on the same page,” Abhisit said.

Tens of thousands of protesters were still out on the street on Monday when the stock market ended down almost 1 percent, losing about 2.6 percent since reaching a 21-month high on Wednesday.

The protesters massed on Sunday outside an army base where Abhisit has stayed, a day after declaring they were “at breaking point,” surrounding his Government House office and forcing thousands of troops to pack up and leave to avert clashes.

“The unsettling political situation will limit fund inflows to the Thai stock market,” said Chakkrit Charoenmetachai, an analyst with Globlex Securities. “Foreign investors have made huge buys ... so they could hold back somewhat now.”

The Finance Ministry said in revised economic forecasts that the economy could grow 4.5 percent this year, up from 3.5 percent seen in December, but officials said political tension could throw that out of gear.

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On Sunday, Abhisit agreed to talks to try to defuse tensions but appeared evasive, insisting he would act in the best interests of the country.

The talks resumed on Monday, but no date was set for a further round.

Analysts say allies of ousted former premier Thaksin Shinawatra, the assumed leader and financier of the “red shirts,” were likely to win whenever an election takes place, raising the possibility of another judicial or military intervention.

One of the protest leaders, Weng Tojirakarn, said a new election was the only way to end the deadlock. “There’s no point buying time,” he told Abhisit.

After two weeks of peaceful rallies, the “red shirts” have intensified their campaign to topple the government, triggering fears of clashes between security forces and protesters and a flurry of negotiations to defuse tensions.

It appeared they were responding to calls late last week by the exiled Thaksin for a campaign of “civil disobedience.”

The threat of a flare-up by the protesters and a slew of mysterious but non-fatal grenade attacks and small bombings on government buildings, banks, and three state-controlled television stations have rattled the city of 15 million.

The protests and symbolic attacks continue to draw attention to the deep divisiveness in Southeast Asia’s second-biggest economy which has clouded the long-term outlook, with foreign investment pledges down 15 percent this year.

Additional reporting by Pracha Hariraksapitak; Writing and additional reporting by Martin Petty; Editing by Nick Macfie