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WASHINGTON (AFP) - - The International Monetary Fund Wednesday forecast the global economy will contract a punishing 1.3 percent this year because the financial crisis is proving more entrenched than expected.

“The global economy is in a severe recession inflicted by a massive financial crisis and acute loss of confidence,” the IMF said in its semi-annual World Economic Outlook (WEO) report.

The IMF warned the outlook was “exceptionally uncertain,” with risks weighing on the downside, in its assessment that the world economy was sliding into “the deepest post-World War II recession by far.”

It was the third time the IMF has slashed its 2009 world growth estimate this year. In January, the multilateral institution saw growth of 0.5 percent, but by March it had forecast a contraction of between 0.5 percent and 1.0 percent.

The IMF also cut its forecast for 2010 by more than a full percentage point, predicting sluggish growth of 1.9 percent globally.

According to IMF economists, the global economic and financial crisis will hammer the advanced economies the hardest, with their gross domestic product (GDP) — a measure of a country’s goods and services output — shrinking at an annual rate of 3.8 percent this year.

Emerging market and developing countries would generate weak growth of 1.6 percent.

The spreading downturn, stemming from a dramatic escalation of the global financial crisis last September following the collapse of US investment bank Lehman Brothers, would affect countries representing three-quarters of the global economy, it said.

“Financial stabilization will take longer than previously envisaged, given the complexities involved in dealing with bad assets and restoring confidence in bank balance sheets,” the IMF said.

The US economy, the world’s largest, would contract 2.8 percent in 2009, while Japan’s, the second-largest, would shrink a massive 6.2 percent.

The IMF forecast a 4.2 percent contraction in the 16-nation eurozone and a 6.0 percent downturn in Russia.

It slashed growth forecasts for powerhouses China and India, to 6.5 percent and 4.5 percent, respectively.

The grim report came as finance chiefs gather in Washington for this weekend’s meetings of the IMF and its sister institution, the World Bank.

The IMF predicted a slow recovery next year, with the rate of contraction expected to “moderate” from the second quarter onward.

The growth in 2010 would come entirely from the emerging market and developing countries, at 4.0 percent, while developed countries’ economies were expected to stagnate.

But the IMF warned: “Achieving this turnaround will depend on stepping up efforts to heal the financial sector, while continuing to support demand with monetary and fiscal easing.”

Olivier Blanchard, the IMF’s chief economist, highlighted that weak growth would stoke unemployment.

“As long as growth is below normal, unemployment will continue to increase. We thus expect unemployment to crest only towards the end of 2010, and to decrease after that,” Blanchard said at a news conference.

On Tuesday, the IMF estimated the cost of the global economic crisis at more than four trillion dollars.

Banks and other financial institutions in the United States, the eurozone, Britain and Japan would have to write down a 4.05 trillion dollars in soured credit, according to an estimate covering the period from the onset of the financial crisis, in mid-2007, to 2010.

The crisis has slammed international trade, with volume expected to plunge 11 percent this year before eking out 0.6 percent growth in 2010.

Consumer prices in developed countries were under pressure and would fall 0.2 percent in 2009, according to the forecast.

The IMF warned of a difficult transition for the financial system and called on policymakers to take actions “with a long-term vision of a healthy, efficient, and dynamic financial system.

BANGKOK (AFP) - - Thai Prime Minister Abhisit Vejjajiva has lifted a state of emergency in Bangkok, saying that he wanted to foster reconciliation after violent street protests against his government.

Abhisit imposed emergency rule in the capital and five surrounding provinces on April 12 after protesters disrupted a summit of Asian leaders in the coastal city of Pattaya before the demonstrations spread to the capital.

Two people were killed and 123 injured as protesters clashed with troops despite the state of emergency.

The latest political demonstrations to hit the kingdom and its fractured politics ended on April 14 when the protesters abandoned a three-week sit-in outside Abhisit’s offices fearing a military crackdown.

“Today I intend to lift the state of emergency. At first I wanted to announce it in the morning (of Thursday) but as it is already past midnight it is considered a new day,” Abhisit earlier told a special sitting of parliament.

“Lifting the state of emergency is part of measures to find a solution for the country. The government wants to show its sincerity, that the government wants reconciliation and to make the country move forwards,” he added.

Government spokesman Panitan Wattanayagorn later confirmed that the emergency regulations had been lifted.

“It’s effective since 1:00am (1800 GMT Thursday) this morning,” Panitan told AFP. “Today the government will repeatedly announce it on television and radio.”

The parliamentary sitting was held to find ways of healing the bitter political divide between Abhisit and his opponents, the so-called “Red Shirt” movement largely loyal to ousted former premier Thaksin Shinawatra.

Authorities have issued warrants for the arrest of Thaksin — who was toppled in a coup in 2006 and lives in exile — and 12 other allies for allegedly inciting the protests in Pattaya.

“After the lifting of the state of emergency all the suspects that have been detained under (emergency) law will be released, but those held under criminal cases would have to go before the law,” Abhisit said.

A government minister had earlier this week said that a fresh Red Shirt rally planned outside the emergency zone on Saturday would mean that the state of emergency would be prolonged.

The protest is due to take place in Samut Sakhon province, 36 kilometres (22 miles) outside Bangkok.

On Monday, Jakrapob Penkair, a senior Red Shirt leader, told AFP from an unknown foreign location that the group would continue their campaign against Abhisit.

The Red Shirts want Abhisit to quit and call elections, saying that he came to power unfairly in December after a court toppled Thaksin’s allies from power.

Police are meanwhile still hunting the gunmen behind an assassination attempt on Sondhi Limthongkul, the founder of the rival “Yellow Shirts” movement which led a blockade of Bangkok’s airports last year.

The airport siege ended after the court ruling that helped bring Abhisit to power.

Thai army chief Anupong Paojinda admitted Thursday that three bullets used in the attack came from a military unit.

LOS ANGELES - “American Idol” judge Simon Cowell says he will leave the most popular show on television if it ever slips from the top spot in the ratings.

“The idea that for the next five years, I’d be doing exactly what I’ve been doing for the past five years … the thought is just too depressing,” Cowell said in a recent interview in his trailer, awaiting a taping of “Idol” at CBS Television City. “I’d go nuts, bored out of my mind. You have to evolve, you have to change. I like the challenge of launching something new.”

With Cowell’s deal with Fox expiring at the end of next season, that something new could be a U.S. version of his U.K. singing competition series “The X Factor.” Any doubts about Cowell’s role in the success of “Idol” disappeared when he launched “Factor” three years ago. The similarly formatted show became a massive hit that has since supplanted “American Idol” predecessor “Pop Idol.”

The “Factor” success was worrisome enough for Fox to forbid Cowell from launching the show in the U.S. while he’s under his current “Idol” deal. But all that could soon change. Between the continuing popularity of “Idol” and Cowell’s ownership of “Factor,” he’s armed with both a carrot and a stick.

Asked if he would want to stay on “Idol” if the series ever slips from No. 1 in the ratings, Cowell burst out laughing at the apparent obviousness of the answer.

“Absolutely not!” he said, looking horrified. “Being No. 1 is verging on an obsession with me. I don’t like being No. 2. I don’t mind when you start at No. 10 — people don’t always go on as No. 1 — and you’ve got somewhere to go. But if you’re at the point you’ve reached it, of course you want to stay there.”

Though the “Idol” audience has declined over the past few seasons, the show remains far and away the ratings champ, with about 22 million viewers per episode. No other program approaches its popularity.

Unlike many in the TV business, Cowell rejects the claim that “Idol” ratings erosion is inevitable.

“I don’t accept the argument of fragmentation or declining numbers,” he said. “The Super Bowl goes up every year.”

“Factor,” he noted, also has increased its audience every year, which suggested to Cowell that the U.S. is ready for another music competition series.

“We have to bring in another music show,” he said. “In the U.K., there is more than one type of music show running throughout the year. And I think the same thing could happen here, because for the fall, nothing really happens. It’s something we’ve been thinking about … I would definitely do it now.”

“Maybe it’ll be ‘X Factor,’” he teased vaguely. “Maybe it’ll be something new.”

WASHINGTON (AFP) - - A string of surprisingly strong earnings reports suggests US banks are emerging from a near-death experience, but some analysts say the troubled sector faces more pain.

Bank of America on Monday joined the parade of financial firms reporting robust results — a profit of 4.2 billion dollars in the first quarter, beating its performance for all of 2008.

Last week, Citigroup, JPMorgan Chase and Goldman Sachs all topped expectations with strong profits, a hopeful sign for an industry critical to recovery from the severe recession. Wells Fargo said its results would show “record” profits in the January-March quarter.

The apparent renewed health of banking sector comes in part from record-low interest rates from the Federal Reserve, which has cut its base rate to near zero as part of an effort to stimulate lending and growth.

“The banks are benefitting from a jump in mortgage refinancing as well as the fact that with interest rates so low, they are able to borrow cheaply and therefore profit more from lending,” said John Wilson at Morgan Keegan.

“It ought to be difficult for a bank not to make money in this environment.”

But banks are also setting aside large chunks of cash for bad loans, suggesting they anticipate more mortgages and credit card debt may sour.

Bank of America for example added a hefty 6.4 billion dollars to its loan loss reserve. Citigroup charged off some 4.6 percent of its loans.

Although Citi managed to show a profit of 1.6 billion dollars in the first quarter after losses of more than 18 billion in 2008, some analysts were unimpressed.

Citi’s results included “several one-time items which muddied the waters in assessing the franchises underlying performance,” said Goldman Sachs analyst Richard Ramsden.

Some analysts say that below the surface, banks are still fragile and may face another round of deep problems ahead, especially if the economy remains weak.

Martin Weiss at Weiss Research called the surge in earnings “bogus,” and a result of tricks including an easing of mark-to-market accounting rules.

“Regulators have now agreed to let banks cover up their toxic assets by booking them at fluffy-high values, bearing little resemblance to actual market prices,” he said. “Like magic, the bad assets are suddenly worth more.”

Leahey said most banks have written off troubled mortgage securities but now face issues with rising defaults on other loans and credit cards.

“Banks are making money in traditional business lines but that could be swamped by a second tidal wave of losses tied to the economy,” Leahey added.

Skewing bank results, say analysts, has been payments from bailed-out insurer American International Group (AIG), which shelled out tens of billions of dollars to banks to cover soured investments or so-called credit default swaps.

Goldman Sachs, for example, received nearly 13 billion dollars from AIG before it posted a quarterly profit of 1.8 billion dollars.

“In the case of Goldman, the AIG payments dwarfed the positive earnings,” said Bob Eisenbeis, economist at Cumberland Advisors. “That’s the reason that people are justifiably skeptical about these earnings.”

Eisenbeis said banks “have every incentive to squeeze a lot of positives into this quarter” to end the vicious cycle of falling asset and stock prices that has led to a death spiral for some institutions.

Some skeptics say AIG, which has gotten a US government bailout worth some 180 billion dollars, is being used to “funnel” cash into the banking system.

“Anybody owed money by AIG got bailed out 100 cents on the dollar, and some people don’t thing that is fair,” Leahey said. “But you cannot not avoid paying 100 cents on the dollar without going to bankruptcy court.”

Robert Brusca of FAO Economics said AIG is indeed a funnel but possibly the only way to avert a calamity in the banking sector that would deal a further blow to the economy.

“If you didn’t help AIG, then AIG would not be able to pay off the banks, and we would be stuck with a collapsing banking system,” he said.

Brusca said it remains unclear how much AIG has helped the bottom line of the banks because earnings reports lack such details.

“We know the banks are very impaired, they have a lot of problems,” he said. “And we know they will get worse as long as the housing problems get worse.”

NEW YORK - Thailand will be able to overcome the civil unrest that has paralyzed and embarrassed the Southeast Asian country, Thai Foreign Minister Kasit Piromya said on Tuesday.

“I am confident, yes, that we can overcome it,” he said in remarks to the Asia Society in New York.

But he said a summit of Asian leaders that has been cancelled twice because of the instability will have to wait until the country has returned to normal.

Thai Prime Minister Abhisit Vejjajiva suffered a huge embarrassment when anti-government protesters invaded the Thai venue for the East Asia Summit 10 days ago, forcing its cancellation. Two people died and more than 100 were injured in the protests.

Bangkok remains under emergency rule as the government tries to contain political violence that has seen troops clash with protesters and an assassination attempt on the leader of a royalist pro-government movement.

Kasit said Bangkok would consult with ambassadors from the other 15 invited nations before deciding when to reschedule the summit of the 10 member nations of the Association of South East Asian Nations plus China, Japan, South Korea, India, Australia and New Zealand.

“Without a political settlement there is no point in having a summit meeting in Phuket while the streets of Bangkok are still full of the red shirts and the yellow shirts,” Kasit said, referring to protesters. “Let’s settle the political thing first and then we can determine the dates later.

Foreign Ministry officials said earlier on Tuesday the summit may be held in June on the southern resort island of Phuket, more than 530 miles from the capital.

The political instability has been a concern of foreign investors, whose confidence was hit by efforts by the previous military-installed government to tighten the Foreign Business Act to restrict foreign ownership of local companies.

Kasit said his government would keep the Foreign Business Act “the way it is” and protect intellectual property rights.

“We will maintain Thailand as an open market economy, friendly to the international community,” he said.

He also praised the restraint of the security forces, saying, “If there were to have been one death caused by the security forces Thailand would have turned into civil war.”

MOGADISHU (AFP) - - The French navy intercepted a pirate “mother ship” in the Gulf of Aden and detained 11 fighters, officials said as the United States called for tougher global action against sea bandits.

After Somali pirates attacked an American freighter with rocket grenades, US Secretary of State Hillary Clinton unveiled a four-point plan that targets pirate assets and more prosecutions in countries that have been the victims of sea hijackings.

A French warship caught a “mother ship” 500 nautical miles (925 kilometres) off the Kenyan coast after tracking them from a failed attack on a Liberian-registered vessel, a French Defence Ministry spokesman said.

The 10-metre (33-foot) mother ship was carrying two assault skiffs for attacks, the spokesman said, adding that the captives were being held on the warship, the Nivose.

“The frigate spotted the pirates on the evening of April 14 when its helicopter intervened to thwart an attack on the merchant ship Safmarine Asia. It followed their boats overnight and intervened at dawn,” he said.

The Nivose is part of an eight-ship anti-piracy task force from France, Germany, Spain and Italy sailing under the EU banner.

French foreign ministry spokesman Romain Nadal said more European nations would soon join the force patrolling an area of the Indian Ocean that sees 16,000 ships pass through per year.

The United States, Russia, India, Turkey, China and others also have warships protecting international shipping but have not stopped the pirates from stepping up attacks.

The US secretary of state said the United States wants to “explore ways to track and freeze pirate assets” and was determined to make sure “states take responsibility for prosecuting and imprisoning captured pirates.

“We notice pirates are buying more and more sophisticated equipment… buying faster and more capable vessels,” Clinton said. She insisted there are “ways to crack down on companies that do business with pirates.”

Amid another intense 24 hours of sea attacks, pirates fired rocket grenades and machine gun fire at an American freighter carrying food aid to Africa. But the US Navy intervened and the ship carried on to the Kenyan port of Mombasa.

“We are under attack by pirates, we are being hit by rockets. Also bullets,” Liberty Sun crewman Thomas Urbik told his mother in email messages reported by CNN television.

“We are barricaded in the engine room and so far no one is hurt. (A) rocket penetrated the bulkhead but the hole is small. Small fire, too, but put out.”

The USS Bainbridge, which mounted the operation to release Richard Phillips, captain of US cargo ship Maersk Alabama, from pirate hands, came to the rescue of the Liberty Sun, officials said.

The pirates said the Liberty Sun was attacked in revenge for the operation by US Navy Seals at the weekend to re scue Phillips. Three pirates were killed by American snipers.

“We intended to destroy this American-flagged ship and the crew on board but unfortunately they narrowly escaped us,” pirate commander Abdi Garad told AFP.

“The aim of this attack was totally different. We were not after a ransom. We also assigned a team with special equipment to chase and destroy any ship flying the American flag in retaliation for the brutal killing of our friends.”

In another development, Greek authorities said Somali pirates on Wednesday released a Greek-owned cargo ship, the Titan, that had been seized with its crew of 24 on March 19 when it was heading to South Korea from the Black Sea.

Pirates have taken four ships since losing battles with US and French forces at the weekend. Two days before the Seals operation, French commandos stormed a yacht on which two French couples and a child were held. One male hostage and two pirates were killed.

French commandos had already launched rescue operations in two previous cases over the past year, killing and capturing pirates. And three Somali pirates arrested on the yacht on Friday have been taken to France.

According to sources close to the pirates, French ships are now also a prime target.

But pirates have been swift to brush off their recent losses and have seized four more ships since the weekend.

At least 17 ships and close to 300 crew are held by Somali pirates. Ten of the ships have been taken this month.

A US lawmaker known for broadsides at US foreign policy says Somali piracy has an age-old solution: “Letters of marque” empowering private citizens to chase the seaborne scoundrels from the oceans.

Republican Representative Ron Paul and a handful of conservative theorists say it’s time that the US Congress used the technique, pioneered by European powers in the 18th Century as a way to wage naval warfare on the cheap.

Major shipping companies should accept a “go at your own risk” approach and not expect government help when they transit through pirate-infested waters, Paul said this week in a video posted on the public Internet site YouTube.

“I don’t think just because people go into these dangerous waters that our army and navy and air force and everything has to follow,” he said, adding that letters of marque would allow merchant ships to sail armed.

MANAGUA (AFP) - - Nicaragua said it had given a diplomatic passport to Thailand’s fugitive former prime minister Thaksin Shinawatra, whose Thai passport was revoked on charges of inciting violence.

The billionaire Thaksin, deposed in a 2006 coup and living in exile to avoid a jail term for corruption, has made a series of speeches in recent weeks calling for “revolution” as his supporters have taken to the streets.

Thailand revoked his passport after his supporters forced the cancellation of an Asian summit at the weekend, and Nicaragua said Thaksin was to be accredited as an ambassador with a “special mission” to help bring investment to the country.

He was given the passport earlier this year, the government said in a statement.

Pro-Thaksin demonstrators say his allies were unlawfully pushed from power by a court ruling last year, and have been calling for current premier Abhisit Vejjajiva to step down and hold fresh elections.

“Thaksin Shinawatra was democratically elected by the majority of Thai people, and was then forced to abandon his duty by a coup in 2006,” said Rosario Murillo, Nicaragua’s first lady and a government spokeswoman.

Thailand said it had no extradition treaty with Nicaragua and otherwise had little to say about the announcement.

Foreign ministry spokesman Tharit Charungvat said Thailand had “not yet” made a formal protest to authorities in Managua.

“Nicaragua can give whatever they want to,” Tharit told AFP.

Thailand issued an arrest warrant for Thaksin and 12 supporters following demonstrations in the capital Bangkok Monday which left two dead and scores injured.

Demonstrators loyal to Thaksin, known as “Red Shirts” because of their trademark attire, surrounded Abhisit’s offices three weeks ago to demand his resignation before moving to the resort of Pattaya to disrupt the Asian summit.

They accuse British-born Abhisit of being a stooge of Thailand’s military and of coming to power illegally after Thaksin’s allies were removed from government by a court in December.

The protesters returned to Bangkok on Monday where they fought street battles with armed troops in which two local residents who challenged the demonstrators were killed.

The Bangkok Post accused the protest leaders and Thaksin of “heinous crimes” while another newspaper, The Nation, said the peaceful end to the riots had strengthened Abhisit.

Sixteen-year-old actress Miley Cyrus became one of the biggest stars in Hollywood on Sunday as her first nonconcert movie topped the North American box office, earning twice as much as Disney had forecast.

Walt Disney Co’s “Hannah Montana: The Movie” sold $34 million worth of tickets at the three-day Easter weekend, as fans of the perky starlet rushed to see the first big-screen adaptation of her hit Disney Channel TV series.

Cyrus returned the favor, turning up with her father and co-star, Billy Ray Cyrus, at theaters in Utah and Tennessee and blogging about her wild weekend on Twitter.

“omgomg! my fans rock! the movie is doing great you guys! omg AND its all cause of you I LOVE U ALL! IF YOU HAVENT SEEN IT YET CHECK IT!,” she wrote, using the “omg” acronym as shorthand for “Oh, my God.”

As in her TV show, Cyrus plays a regular schoolgirl by day and a pop star by night. But her father decides she needs to get back to her small-town roots, so takes her on a surprise trip to her old Tennessee home where love and other complications ensue.

Going into the weekend, Disney had hoped “Hannah Montana” would perform in the same range as 2003’s “The Lizzie McGuire Movie,” a vehicle for Disney Channel star Hilary Duff. “Lizzie” opened to $17.3 million in 2003, and ended its domestic run with $42.7 million.

DISNEY SURPRISED

On Sunday, the studio denied that it had deliberately set a low target. “It caught us by surprise. No doubt about it,” said Chuck Viane, the studio’s president of domestic theatrical distribution. “Outside of Wow! what can you say?”

Exit polling showed that women made up 80 percent of moviegoers, and 60 percent of the audience was aged between two and 17, Viane said.

Cyrus’ previous big-screen outing, “Hannah Montana/Miley Cyrus: Best of Both Worlds Concert Tour,” opened with $31 million last year, ending up with $65 million to become the biggest concert movie of all time.

Disney will soon begin shooting another Cyrus movie, “The Last Song,” Viane said.

Cyrus is now a bigger draw than Oscar-winners like Julia Roberts and Jodie Foster, who each had $13 million openings with their last movies, “Duplicity” and “Nim’s Island,” respectively.

Last weekend’s champion “Fast & Furious” slipped to No. 2 with $28.8 million, taking the 10-day total for Universal Pictures’ race-car thriller to $118.0 million. The studio is a unit of General Electric Co’s NBC Universal.

DreamWorks Animation SKG Inc’s “Monsters vs. Aliens” was down one at No. 3 with $22.6 million in its third weekend; its total rose to $141 million.

Also new was the dark comedy “Observe and Report,” which opened at No. 4 with $11.1 million, falling short of the expectations of its distributor, Warner Bros. Pictures. The Time Warner Inc.-owned studio had hoped for an opening in the $14 million to $15 million range.

The Japanese-inspired fantasy “Dragonball Evolution” opened at No. 7 with $4.7 million, also a little lower than the modest forecasts of its distributor 20th Century Fox. But the News Corp-owned studio said the film is doing better internationally with sales to date of $37 million.

OSLO (AFP) - - A Norwegian man faces a heavy fine and a driving ban after police caught him having sex with his girlfriend while speeding on the motorway, police said Monday.

The unnamed couple, a 28-year-old man and a 22-year-old woman, were caught in the act late on Easter Sunday by traffic police on the E18 highway, some 40 kilometres (25 miles) west of Oslo.

Officers who clocked the couple’s silver Mazda 323 racing at 133 kilometres per hour in a 100 zone realised they were doing more than just breaking the speed limit, police told AFP.

“It was veering from one side to the other because the woman was sitting on the man’s lap while he was driving and doing the act, shall we say,” said Tor Stein Hagen, a superintendent with Soendre Buskerund district police.

“He couldn’t see much because her back was in the way,” he added.

“Why they did it on a highway with such a high risk we don’t know.”

After following the couple for nearly a kilometre, officers pulled the car over at a service station.

“We have taken away his driving licence because of the danger that he caused,” Hagen said.

Prosecutors will decide within the next week what his punishment will be, with police having filmed the incident to use as evidence against the driver.

Hagen said he expected the man to face a fine of “several thousand Norwegian crowns” and a lengthy driving ban.

BANGKOK - Thousands of Thai troops, firing automatic weapons and tear gas, forced anti-government protesters rampaging across Bangkok to retreat Monday to their main encampment ringing the seat of government. The demonstrators said they were prepared for a “final stand.”

In a major escalation of Thailand’s ongoing turmoil, protesters and combat troops locked in a series of tense confrontations and cat-and-mouse chases for 12 hours. At least 79 people were reported injured. The army spokesman said troops fired blank bullets into the crowds and live shots overhead.

As evening fell, some of the 6,000 troops deployed in Bangkok began moving toward Government House, where the protesters have been holding out since March 26. An estimated 5,000 of the demonstrators were gathered in the Government House area.

“This will be our final stand. I beg that you return here and face them together,” protest leader Jatuporn Phromphan shouted from a platform near the seat of government. “We will use peaceful means and stay right here to end their violence.”

Army spokesman Col. Sansern Kaewkamnerd said troops were narrowing the area of unrest. “It’s going to take time, and we are trying to cause as little loss as possible.”

Hundreds of soldiers and police assembled at the Royal Plaza, about a mile (less than 2 kilometers) from the Government House confronting about 100 female protesters who knelt down and screamed “Please stop, brothers.” Some hugged the soldiers.

“I don’t mind dying right here if it means we become a real democracy. You can kill me right here. I am not here to cause trouble. I just want my rights,” said Tanyawalai Wongsuriyaneth, 46, a female protester returning to join the rally at Government House.

The demonstrators are demanding the resignation of Prime Minister Abhisit Vejjajiva, saying his four-month-old government came to power illegally.

Earlier, the protesters were stationed at a half-dozen points in Bangkok, defying government-imposed state-of-emergency measures that ban gatherings of more than five people.

Protesters commandeered public buses to block several key intersections, set tires and vehicles on fire and sent two unmanned buses, one of them burning, hurtling toward lines of soldiers. The bus swerved and then ricocheted off trees on the side of the road before coming to a halt, with no one injured. The other bus also crashed without injuring anyone.

In one of several confrontations, a line of troops in full battle gear fired volleys of M-16 fire, most of it aimed above the heads of protesters and turned water cannons on the crowd near Victory Monument, a major traffic circle.

Armed forces chief Gen. Songkitti Jaggabatara said on nationwide television that soldiers would use “every means to end the chaos” but employ weapons only for self-defense and not “excessively.”

In contrast to a complete security breakdown over the weekend, where a 16-nation Asian summit was canceled after demonstrators stormed the venue, security forces began to take action.

“The shots fired into the crowd were blank bullets. The heads are made of paper, so it only causes sound. We use these when protesters head toward soldiers to push them back. Those fired into the air are real bullets,” said Sansern, the army spokesman.

The red-shirted demonstrators are supporters of ousted former Prime Minister Thaksin Shinawatra and want new elections and Abhisit’s ouster. They accuse the country’s elite _ the military, judiciary and other unelected officials _ of undermining democracy by interfering in politics.

In an interview with CNN on Monday, Thaksin accused the military of lying about firing blank bullets into the crowd, saying soldiers used live ammunition, killed protesters and dragged away their bodies. “They shot people. Many died. Many people were injured,” he said.

“I would like to urge every party that comes together to gather peacefully. War never ended with war,” said Thaksin, who a day earlier phoned-in to a rally of supporters and called for a “revolution.”

Political tensions have simmered since Thaksin was ousted by a military coup in 2006 amid accusations of corruption and abuse of power. He remains popular in the impoverished countryside for his populist policies.

His opponents _ many in urban areas _ took to the streets last year to help bring down two governments led by his allies, seizing Bangkok’s two airports in November for about a week.

Parliament then appointed Abhisit in December after a court ordered the removal of the previous pro-Thaksin government citing fraud in the 2007 elections. Thaksin supporters took to the streets in protest, and their numbers grew to 100,000 in Bangkok last week.

Abhisit appealed Monday to the demonstrators to return to their homes, saying the government was using “the softest measures possible” against them.

“All the work I am doing is not to create fear or put pressure or to harm any group of people. It’s a step by step process to restore order and stop violence,” he said on nationwide television.

Monday’s first and most serious clash began before dawn, as troops in full combat gear advanced to disperse the protesters, who were occupying a major junction, according to witnesses.

At the nearby Century Park Hotel, foreign tourists were seen rushing into taxis and heading for Bangkok’s international airport. But others seemed unruffled.

“We’re from South Africa. We don’t scare easy,” said Estelle Jones, a tourist from Johannesburg.

France, Britain, Australia, the United States, Japan, South Korea and the Philippines were among countries that issued travel advisories Monday, urging citizens to avoid trips to Thailand and for those already in Bangkok to stay in their hotels and away from protests.

The U.S. Embassy issued a warden message urging Americans “to avoid the areas of demonstrations and to exercise caution anywhere in Bangkok.”

Dr. Chatri Charoenchivakul of the Erawan Emergency Coordination Center said at least 70 people were injured, most of them from tear gas, while two soldiers and two civilians suffered from gunshot wounds. Another nine people were injured in clashes elsewhere, he said.

Monday marked the beginning of the Thai New Year, normally the country’s most joyous holiday. The Bangkok municipal government canceled all its festivities, but despite the rioting many Thais and foreign tourists began engaging in the ritualistic water throwing and general partying.