Thai "yellow shirt" leader Sondhi shot, wounded [-His yellow shirt is turning red now?]

• "Yellow shirt" leader wounded in assassination attempt
• State of emergency still in place in Bangkok
• Stock market moves higher, baht stable

By Panarat Thepgumpanat

BANGKOK, April 17 (Reuters) - The founder of Thailand's "yellow shirt" protest movement, which was behind the week-long occupation of Bangkok's main airports late last year, was shot and wounded early on Friday, a spokesman for his movement said.

A doctor at Vajira Hospital in Bangkok told reporters that doctors were operating on Sondhi Limthongkul, who had a bullet in his head.

Thailand's capital is still under emergency rule and the cabinet was due to hold a special meeting on Friday to discuss the past week's political violence, as well as the budget and stimulus package for a country heading into recession.

Sondhi's People's Alliance for Democracy (PAD) was not part of the latest political violence in Thailand, which involved the red-shirted supporters of Thaksin Shinawatra, a former prime minister ousted in a 2006 coup and now in self-imposed exile.

But their protests following a subsequent election dominated by Thaksin's allies undermined the government before the constitutional court effectively disbanded it.

The stock market and the baht were remarkably stable, as on Thursday when trade resumed after a three-day holiday for the Thai new year.

Stocks opened 0.5 percent higher, influenced by rises on overseas market, and continued higher. At 0310 GMT the index was up 1.39 percent.

The baht was only marginally lower on the day at 35.40/43 per dollar, but analysts said the latest violence in Thailand's political crisis would unnerve foreign investors.

"The market should be volatile and foreign investors are going to sell more," said Kosin Sripaiboon, head of research at UOB Kay Hian Securities before the stock market opened.

"The political scene remains fragile. The end of the protest over the long holidays is just a pause, it's not over. There are many issues that remain unresolved," he said.

Sondhi's car was attacked at a petrol station near the central bank at around 5 a.m. (2200 GMT on Thursday), a PAD spokesman told Reuters.

The PAD is an extra-parliamentary group of royalists, academics, former military people and Bangkok's middle classes united in their loathing of Thaksin, a former telecoms billionaire who draws his support from the rural poor. [ID:nSP395464]
Sondhi founded the PAD in 2005 after falling out with Thaksin, who used to be a business associate.

PAD spokesman Panthep Puapongpan said a driver and bodyguard were also in Sondhi's car. They were also wounded, the driver seriously.

He said the attack was carried out by two gunmen in a vehicle who shot out the tyres of Sondhi's car and then riddled it with bullets.

Finance Minister Korn Chatikavanij said on Thursday the turmoil would mean bigger tax shortfalls than anticipated as private businesses delayed investment and the tourist sector faced even more losses.

"It's undeniable that the country has suffered in every dimension from what has happened," Korn said. "Some people now say the contraction this year may be as much as 5 percent compared with earlier expectations of 2.5-3.0 percent."

After a 6.1 percent contraction in the economy in the final quarter of 2008, Thailand is almost certainly experiencing its first recession since the Asian economic crisis 11 years ago.

Authorities have extended the three-day Thai new year holiday until the end of the week to help restore law and order and repair infrastructure damaged in the protests, especially at key road junctions.

Faced with overwhelming government force on Tuesday, the red-shirted protesters left Government House, but the underlying divide between a royalist elite and middle class elements of Thai society who oppose Thaksin and his rural backers remains.

"I would humbly urge his majesty (to) come and help heal this rift," Thaksin told Reuters in Dubai on Thursday, one of several countries he has spent time in since leaving Thailand last year. He has been found guilty on conflict of interest charges and faces jail if he returns to Thailand.

(Additional reporting by Vithoon Amorn, Viparat Jantraprap and Arada Therdthammakun ; Writing by Alan Raybould; Editing by David Fox)