(Reuters) - Thai anti-government protest leaders evaded capture on Friday in a botched police raid as Prime Minister Abhisit Vejjajiva unexpectedly delayed his first address to the nation in four days.
Another two were rescued by hundreds of "red shirts," who heavily outnumbered security forces at a Bangkok hotel owned by the family of former premier Thaksin Shinawatra.
The leaders later joined around 10,000 of their supporters at a hotel and shopping center in the middle of the city, now the main protest encampment in the Thai capital.
"If they use force to disperse us, we will flatten the entire neighborhood," said Jatuporn Prompan, a protest leader who was not among the three escapees, on a red shirt stage.
Abhisit had been scheduled to address national television at 1 p.m. local (2 a.m. EDT), from an army barracks where he has been holed up during the month-long protests, but by 4 p.m. he had not done so and his aides could not provide a reason.
He has been absent from the public eye since Monday.
The government, which had previously said it would not directly confront the protesters, has also stepped up the rhetoric, although no troops were seen on the streets of Bangkok.
"We will arrest and suppress the terrorists. We have set up special task forces hunting for the terrorists," Deputy Prime Minister Suthep Thaugsuban said before launching the attempt to snatch opposition leaders.
The move against the red shirt leaders on Friday follows a failed attempt by troops to eject protesters from one of their sit-in sites in the city last weekend.
At least 24 people were killed and more than 800 injured in the clash, Thailand's worst political violence since 1992, which only appears to have hardened the four-year political impasse and raised the possibility of more bloodshed.
STOCKS FALL
The risk of further instability sent Thai stocks down 3 percent. The market has now lost almost all its gains this year.
"Under the current uncertain situation, we recommend investors to stay along the sidelines at the moment as we could see a possibility of another 5 percent drop in the near term," Julius Baer Research said in a note to clients on Friday.
Thailand's five-year credit default swaps (CDS), often used as a measure of political risk, were trading at 111/116.85 against 105/111 bps on Monday, the last trading day prior to a three-day holiday.
The "red shirts" back Thaksin, who was ousted in a 2006 coup, and want Abhisit to step down immediately and call early elections. The government has offered December -- possibly October -- as poll dates. The powerful military chief this week also suggested early polls to resolve the crisis.
Finance Minister Korn Chatikavanij told Reuters on Thursday Abhisit would not resign as it would "be very negative for the country".
Protesters called off plans to march on television stations that they accused of biased coverage, removing one potential flashpoint with security forces. They hunkered down at their base in a central Bangkok shopping district, which they vowed to make a "final battleground" with the security forces.
The government has also said it would crack down on people it believed to be financing the red shirts and issued summonses under emergency powers for 60 people to report to a military barracks, where Abhisit has set up emergency headquarters.
The violent protests have hit Thai tourism, with occupancy rates less than a third of normal levels in Bangkok, according to a tour operator body.
Morgan Stanley said in a report that losses to tourism, which accounts for 6 percent of gross domestic product, could clip 0.2 percentage point from economic growth this year.
The government says Thailand's economy could grow 4.5 percent this year, but Korn warned that forecast could prove optimistic.
Additional reporting by Viparat Jantraprap; Writing by David Chance; Editing by Alan Raybould and Bill Tarrant
Reuters
