Tens of thousands of protesters fanned out through the Thai capital's old quarter Saturday, reviving their campaign for new polls to replace a government they reject as undemocratic

Some 80,000 demonstrators seeking a new election gathered at eight points in Bangkok's historic heart and vowed to tear down barbed-wire barricades, prompting troops to pack up and leave in a bid to avoid clashes.

"We're at the point where this is it -- this is the breaking point," a protest leader, Nattawut Saikua, shouted to the crowd at what the protesters have called a "historic rally".

"If we lose, we will probably go to jail, if we win, then we get a democracy back," he said.

The fiery rhetoric represents a more confrontational approach by the movement, which backs twice-elected former premier Thaksin Shinawatra and has taken aim at the military and so-called bureaucratic elites it says conspired to overthrow him in 2006.

Thai Finance Minister Korn Chatikavanij said on Friday capital inflows into the Thai bourse should continue for the foreseeable future, although any escalation in political tension could trigger outflows.

The protests highlight a deepening divide in Southeast Asia's second-biggest economy which has made investors think twice about longer term expansion in Thailand.

Many believe the situation will only escalate, especially if a pro-Thaksin government wins the next election as is likely. Many investors are eyeing other, more stable countries.

Troops U-turn

The mostly rural protesters gathered in groups of thousands outside locations that included universities, Buddhist temples and a zoo, all of which were guarded by troops empowered by a tough internal security law to keep the "red shirts" at bay.

In response to threats, the army defiantly declared its troops were going nowhere.

"It's just not possible we will withdraw our forces," army spokesman Sansern Kaewkamnerd told Channel 3 television.

But minutes later, soldiers at several locations took down barricades and left.

"We have adjusted our troops to a more appropriate place. We're doing this to avoid any confrontation and to reduce the tensions," Sansern later told Modern Nine television.

A military crackdown on protesters in Bangkok almost a year ago led to Thailand's worst street violence in 17 years, which prompted sovereign credit ratings downgrades and earned the "red shirts" a reputation as thugs hired by Thaksin.

The army's latest response highlights simmering tensions in Bangkok as Abhisit continues to frustrate the "red shirts" by refusing to dissolve parliament and setting "unacceptable" pre-conditions for dialogue.

A small bomb exploded near the city's customs department, far from the protest site, early on Saturday, the latest in a slew of mysterious blasts and grenade attacks that have caused minimal damage but kept the city on edge.

Abhisit left a meeting of his Democrat Party in the seaside town of Hua Hin by helicopter on Saturday to return to a military base in the capital, where he has spent most of the past two weeks.

Reuters