Thai troops fired live rounds into charging anti-government protesters in a chaotic clash that killed a soldier and wounded 19 people on a congested highway in Bangkok's suburbs yesterday.

In defiance of a state of emergency, about 2,000 "red shirt" protesters left their main protest site in central Bangkok's shopping district on pickup trucks and motorbikes for a "mobile rally" but were halted by a roadblock of troops and riot police.

About 100 protesters who had moved ahead of the main convoy charged at the security forces, who at first used batons and shields to push them back, witnesses said.

The red shirts hurled stones, shot metal balls from sling-shots and launched fireworks at the cordon of 450 soldiers.

Troops fired back with rubber bullets followed by live rounds, at first in the air and then narrowly over protesters' heads, as onlookers dashed for cover in cars and buses in the traffic-choked area 40 kilometres north of central Bangkok, Reuters photographers and witnesses said.

Three rounds of fighting finally stopped when a powerful tropical rainstorm drenched the area. By nightfall, troops had largely pulled out and many protesters returned to their three square kilometres fortified encampment in central Bangkok.

Metropolitan police chief Worapong Chiewpreecha said the protesters left behind 62 sets of rocket-propelled M-79 grenades.

State agencies said one soldier was killed and 19 people were wounded. Witnesses said the soldier was shot through his helmet while riding on a motorbike towards security forces, apparently caught in friendly fire. Another soldier was wounded.

The crisis, pitting protesters seeking elections against the embattled, military-backed government of Prime Minister Abhisit Vejjajiva, is now in its seventh week. It has killed 27 people, wounded more than 900, paralysed Bangkok and hurt Southeast Asia's second-biggest economy.

"The red shirts were testing the will of the security forces and now we saw that the government is getting serious about this," said Somjai Phagaphasvivat, a professor at Thammasat University.

"But it's hard to pronounce victory for either side from the incident today. There is still a lot of uncertainty."

The protesters began the day in high spirits, honking horns and singing as they headed for a market 50 kilometres away in a rowdy, provocative procession.

The violence stoked fears of more unrest ahead after grenade attacks last Thursday in Bangkok's business district killed a woman and wounded more than 80 people, and the military's failed attempt to disperse protesters on April 10 killed 25 people.

The crisis is taking a deepening toll on Thailand's economy.

Another three months of protests could shave 0.64 of a percentage point off Thailand's 2010 economic growth forecast of 4.5 per cent, according to government forecasters.

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