Uneasy peace in Thailand, uncertainties lie ahead

• Curfew extended for 3 days
• Unrest could cost Thai economy $3 billion - source (Adds scattered unrest in northern Bangkok area)

By Jason Szep and Ambika Ahuja

BANGKOK, May 20 (Reuters) - Thai authorities restored order over most of Bangkok on Thursday but the peace looked fragile, a day after rioting and fires that veered towards anarchy as troops took control of a camp occupied by anti-government protesters.

Thousands of the mostly rural and urban poor "red shirt" protesters had deserted their once-barricaded rally site in central Bangkok, but the tough crackdown and bloodshed raised fears of deepening anger among Thailand's underclasses.

Modern Thailand has never seen such a protracted period of urban violence, deadly riots, clashes and widespread destruction, and has never teetered so close to full civil conflict.

"Thailand has become a nation deeply divided, and although talk of a civil war may still be premature, there is a high risk that civil unrest and political violence will not be contained," said Danny Richards, analyst at the Economist Intelligence Unit.

The crackdown that began before dawn on Wednesday morning killed 15 people and wounded nearly 100. About 1,500 protesters took refuge in a temple, where six bodies were found on Thursday. Hundreds who remained inside were coaxed out by police.

Dozens of buildings were torched, including many banks, the stock exchange and Southeast Asia's second-biggest department store. By morning, the worse was over. The protesters were gone.

Some unrest continued in the Din Daeng area, scene of intense fighting last weekend. Dozens of protesters burned tyres and set a bank building ablaze. Troops fired warning shots. But compared to recent fighting, the area was remarkably tame.

Political analysts say the next step is up to Prime Minister Abhisit Vejjajiva, who some say will forever be tarnished by overseeing military operations in which 82 people, mostly civilians, have been killed since April 10.

Nearly 1,800 people have been wounded in the period as the government, backed by Thailand's royalist establishment, and the protesters with their support from the rural masses and ousted premier Thaksin Shinawatra, failed to find common ground.

"He is more than tarnished," Michael Montesano of Singapore's Institute of Southeast Asian Studies said of the British-born, Oxford-educated Abhisit.

"All extenuating circumstances notwithstanding, he will always be recalled as the man whose miscalculated incursion led to a burning Bangkok."

Troops have now established control of Bangkok and the protest encampment occupied since April 3, but at great cost.

Checkpoints of armed troops form a 6 sq-km (2.3 sq-mile) cordon in Bangkok, a city of 15 million known for its raucous nightlife but now reduced to smouldering fires, scarred streets, and 9 p.m. night curfews.

"The question is: how long do troops have to be deployed on this level in the city? The anger is still simmering," said Tanet Charoengmuang, a political scientist at Chiang Mai University.

The red shirts want fresh elections, saying Abhisit lacks a popular mandate after coming to power in a controversial parliamentary vote in 2008 with tacit military support. Abhisit last week withdrew an offer of fresh elections.

Analysts say regardless of the outcome, the violence marked a turning point in a country where the richest 20 percent of the population earn about 55 percent of the income while the poorest fifth get 4 percent, according to the World Bank.

But protest leaders, now detained, called for calm.

"Democracy cannot be built on revenge and anger," Veera Musikapong, chairman of the United Front for Democracy Against Dictatorship, known as the red shirts, said in a televised statement while in custody, calling on protesters to go home.

RURAL UNREST

Thailand's unifying figure, revered 82-year-old King Bhumibol Adulyadej, has not publicly commented on the current bout of turmoil in the kingdom, after defusing previous crises during his 63 years on the throne -- including the last political riots in Bangkok -- on the same date 18 years ago.

The king has been in hospital since Sept. 19.

The unrest has hammered Thailand's lucrative tourism industry, which supports six percent of Southeast Asia's second-biggest economy and employs 15 percent of Thailand's workforce directly or indirectly.

A source at state planning agency National Economic and Social Development Board said the economic impact of nine weeks of political turmoil and rioting would easily cost $3 billion, or about one percentage point of gross domestic product.

A curfew in Bangkok and 23 provinces was extended for another three nights, raising questions about whether authorities feared more unrest in a country where the ranks of the military and the police are split along the same socio-economic fault lines dividing protesters from the government and its affluent backers.

The rioting spread to north and northeast provinces, a red-shirt stronghold and home to just over half of Thailand's 67 million people. But trouble spots were quiet on Thursday and protest leaders urged calm.

Army spokesman Sansern Kaewkamnerd said about 13,000 people were still "actively waiting to riot and perpetrate illegal acts" in provinces under a state of emergency.

In Bangkok, fires at 39 sites still smouldered but most had been extinguished. Central World, Southeast Asia's second-biggest department store and a symbol of wealth, was destroyed. Many of its supporting steel beams had collapsed.

"WOUNDED HEARTS AND MINDS"

The protesters' tented encampment in the heart of Bangkok's commercial district -- an area lined with luxury hotels and shopping plazas -- was strewn with rubbish, clothing and the smell of refuse and human waste. Troops roamed the area and some were positioned on an overhead subway system.

There were no signs of clashes.

Groups of soldiers sat on a sidewalk near the twisted wreckage of trucks that had been packed with explosives and blown up at barricades overnight. They looked relaxed in contrast to the tension of recent days, smiling at journalists.

Ten journalists have been shot in six days of violence, including an Italian cameraman killed on Wednesday.

The surrender of key protest leaders on Wednesday and a seeming end for now to violence that has killed at least 53 people and wounded more than 400 in six days could put the focus back on early elections and a "reconciliation roadmap" the prime minister had proposed before the latest bout of violence.

"We can immediately fix the roads but we do not know how long it will take to fix the wounded hearts and minds of the people," Bangkok Governor Sukhumbhand Paribatra told local television.

(Additional reporting by Damir Sagolj, Nopporn Wong-Anan and Vithoon Amorn; Writing by Jason Szep; Editing by Bill Tarrant)