Protesters push for polls as Thai tensions build

After three days of peaceful demonstrations, fears of violence resurfaced when three grenades exploded at an army base in central Bangkok, wounding two soldiers, reinforcing concerns over Thailand's long-term investment outlook.

The attack failed to deter foreign investors, who bought $40 million (26 million pounds) of Thai stocks on Monday. Thailand's stock market, which leapt 63 percent last year, remained in positive territory, while the baht currency hardly moved.

Despite the increase in tension, foreign funds have been flowing into Thailand's stock market -- to the tune of $852 million over the past three weeks -- as investors seek to benefit from a swift rebound in Southeast Asia's emerging economies.

Investors are looking beyond the turbulence at a trio of factors: Thai assets are already trading at a substantial risk discount, the economy has rebounded well despite bouts of unrest and Abhisit is widely expected to survive the protests.

It was also unclear whether the attack was linked to demonstrations by ousted premier Thaksin Shinawatra's red-shirted supporters, who rallied outside a separate military barracks that has doubled as a command centre for Abhisit.

It came shortly after Abhisit rejected demands by protesters to dissolve parliament and call fresh elections.

Abhisit, backed by the powerful military and establishment elite, made a live television appearance flanked by members of his shaky coalition, and said the time was not right for a poll, which analysts say Thaksin's allies would likely win.

"DON'T LOSE HEART"

In a 40-minute address by video link, during which he broke into song about his love for his supporters, the self-exiled Thaksin urged the "red shirts" to keep up their struggle.