Thai PM to call early election

BANGKOK, Feb 24 (Reuters) Thai Prime Minister Thaksin Shinawatra said he would call an election three years early as he launched a stunning counter-attack today against a rapidly growing campaign to oust him.

''I dissolve parliament,'' he told reporters after an audience with King Bhumibol Adulyadej. ''No reshuffle,'' he added after a senior official had said cabinet changes were ''very likely''.

''I will explain on television tonight,'' Thaksin added of an address his cabinet secretary said would take place at 1900 IST Hrs.

An election should be held within 60 days after the dissolution of parliament and the Election Commission was likely to set April 9 as the date, an official at the commission said.

Analysts said they expected Thaksin, 56, to return to power after the election but with a reduced majority.

He had held out the threat of an early vote in a speech to cheering farmers earlier on Friday, two days before opponents planned to bring 100,000 people onto the streets of Bangkok to crank up the pressure on him to go.

''If you are sick of me, send me home,'' he told 3,000 farmers near Bangkok, emphasising his considerable support in the countryside where 70 percent of Thais live. ''But if you want to continue using me, vote for me and I will work for you.'' Then he went into a meeting with businessmen and government officials to propose a pay rise for civil servants and tax breaks for professionals, street hawkers and office workers to undermine the campaign centred on Bangkok.

The details would be worked out over the next week, officials said.

Analysts said such populist measures might only give more ammunition to critics who have multiplied since his relatives sold Shin Corp, the telecommunications empire Thaksin founded, to a Singapore state firm for a tax-free 1.9 billion dollars.

Nor, some economists said, could the government afford them with fears rising that the political crisis could become a drag on the economy with financial markets showing signs of nerves over the last few weeks.

''RIGHT CALL'' But one top banker said Thaksin was right to call an early election to resolve the crisis.

''This will not have an impact on the overall economy. If he had not done it, things could have got worse,'' said Apisak Tantivorawong, head of state-owned Krung Thai Bank.

But Thaksin's announcement did not persuade his opponents to call off Sunday's demonstration.

''We will certainly rally to confirm our demand to have the prime minister resign,'' said Suriyasai Katasila, a spokesman for the People's Alliance for Democracy which is running the campaign against Thaksin.

Fears the demonstrations against Thaksin -- Sunday's will be the third in a month -- could turn violent have increased as more groups joined the campaign.

The latest was the Dharma Army of Chamlong Srimuang, 70, an ascetic former general who led a successful ''people power'' 1992 revolt against the then military government in which nearly 50 people were killed. He was Thaksin's first mentor.

The addition of the man who brought Thaksin into politics added momentum to the campaign and increased the fears of violence.

''We are mostly concerned that someone will create a situation in which two opposing groups of people meet in one place and start making trouble,'' said Defence Minister Thammarak Isaranura, echoing the fears of many people in Bangkok.

Although Chamlong said his followers would not start anything, businessmen are nervous and appealed to both sides to act with restraint at a rally where riot police and water cannon will be deployed.

Even so, the main Thai stock index, which has wobbled as the anti-Thaksin campaign grew, rose 1.24 percent today, largely, analysts said, because foreign investors reckoned Thaksin would find a way out of the mess.

Thaksin's popularity has fallen to 34.5 percent this month, according to a nationwide poll by Bangkok's Assumption University, compared with 77.5 percent right after he won another landslide election victory a year ago.

That was his second big election victory on the back of solid support in the countryside into which he has pumped large amounts of money and he is showing no signs he expects defeat in the next vote.

REUTERS CH KN1826