A demonstrator holds up a sign as she joins others during a protest against military rule at Victory Monument in Bangkok May 27, 2014. Thailand's military rulers settled down to work at their Bangkok headquarters on Tuesday, firmly in charge with royal endorsement while rounding up critics and searching for weapons they fear could still be used to fight their takeover. REUTERS/Athit Perawongmetha (THAILAND - Tags: POLITICS CIVIL UNREST MILITARY)
By Apornrath Phoonphongphiphat and Amy Sawitta Lefevre
BANGKOK (Reuters) - Protesters trying to topple Thailand's government tightened a blockade around ministries on Tuesday and their leader warned the prime minister that she could be targeted next, as some saw more than two months of turmoil inching towards an endgame.
Major intersections in the capital, Bangkok, were blocked for a second day, and a hardline faction of the agitators threatened to storm the stock exchange.
Protest leaders say demonstrators will occupy the city's main arteries until an unelected "people's council" replaces Prime Minister Yingluck Shinawatra's administration, which they accuse of corruption and nepotism.
The unrest is the latest chapter in an eight-year conflict pitting the Bangkok-based middle class and royalist establishment against the mostly poorer, rural supporters of Yingluck and her brother, Thaksin Shinawatra, a former premier ousted by the military in 2006.
Although the capital was calm and the mood among the tens of thousands of protesters remained festive, analysts said the scope for a peaceful resolution of the crisis ahead of elections called for February 2 was narrowing.
"There is no clear way out," the International Crisis Group (ICG) think-tank said in a report. "As anti-government protesters intensify actions, the risk of violence across wide swathes of the country is growing and significant."
Ministries and the central bank have been forced to operate from back-up offices after protesters led by Suthep Thaugsuban stopped civil servants getting to work.
"In the next two or three days we must close every government office," Suthep told a crowd of supporters. "If we cannot, we will restrict the movements of the prime minister and other ministers. We will start by cutting water and electricity to their homes. I suggest they evacuate their children."
Groups of demonstrators marched peacefully from their seven big protest camps to ministries, the customs office, the planning agency and other state bodies on Tuesday, aiming to paralyze the workings of government.
A student group allied to Suthep's People's Democratic Reform Committee (PDRC) threatened to attack the stock exchange, with faction leader Nitithorn Lamlua telling supporters on Monday it represented "a wicked capitalist system that provided the path for Thaksin to become a billionaire".
A PDRC spokesman said the bourse was not a target.
"We will not lay siege to places that provide services for the general public, including airports, the stock exchange and trains. However, we will block government offices to stop them from functioning," Akanat Promphan told supporters at a rally.
Jarumporn Chotikasathien, president of the Stock Exchange of Thailand, said emergency measures had been prepared to secure the premises and trading systems. Trading was normal with the index up nearly 1.0 percent at the close.
There was no special security visible at the exchange. A Reuters photographer said one group of protesters marched past on their way to the customs department but did not stop.
The demonstrations, which have been gathering pace for weeks, could cost the economy as much as 1 billion baht ($30.33 million) a day, according to a survey released by the University of the Thai Chamber of Commerce.
Disruption to government services compounds the problems faced by Yingluck, who dissolved parliament in December and called a snap election for February. Now working from Defense Ministry facilities on the outskirts of Bangkok, she heads a caretaker administration that has a limited remit and cannot initiate policies that commit the next government.
Yingluck invited protest leaders and political parties to a meeting on Wednesday morning to discuss an Election Commission proposal to postpone the election until May.
But that proposal looked doomed, with protest leaders and opposition party members boycotting the meeting scheduled to be held at the air force's headquarters in the north of the city.
Suthep says he is not interested in any election. He wants a "people's council" to take power and eradicate the political influence of Thaksin and his family by altering electoral arrangements in ways he has not spelt out.
"A deal to postpone the election could buy time for negotiation but would be only a stopgap without a comprehensive, broadly accepted agreement on the future political order," the ICG said. "Thailand is deeply polarized and the prospects for such an agreement are dim."
It is widely thought that, if the agitation grinds on, the judiciary or the military may step in. The military has staged or attempted 18 coups in 81 years of on-off democracy, although it has tried to stay neutral this time and army chief Prayuth Chan-ocha has publicly refused to take sides.
In 2010, the army put down a pro-Thaksin movement that closed down parts of central Bangkok for weeks. More than 90 people, mostly Thaksin supporters, died during those events.
Thaksin turned to politics after making a fortune in telecommunications. He redrew Thailand's political map by courting rural voters and won elections in 2001 and 2005.
He now lives in exile to avoid a jail sentence handed down in 2008 for abuse of power, but he is seen as the power behind Yingluck's government. Their Puea Thai Party seems likely to win any election held under present arrangements.
Many schools have been closed until Wednesday as a precaution in case of trouble, but shops and most private offices were open, even if many shoppers and commuters appeared to be avoiding the city centre.
The government has deployed 10,000 police to maintain law and order, along with 8,000 soldiers at government offices, but they are largely keeping out of sight.
Ministers have said they want to avoid confrontation, hoping the protest will run out of steam. It flared up in early November when the government tried to force through a political amnesty that would have allowed Thaksin to return a free man.
(Additional reporting by Pairat Temphairojana and Panarat Thepgumpanat; Writing by Alan Raybould and John Chalmers; Editing by Nick Macfie and Robert Birsel)