(Reuters) - Thai Prime Minister Abhisit Vejjajiva warned anti-government protesters on Sunday there was a risk of "losses" if they did not end a rally that has closed down a shopping district in Bangkok for a month. "From now on, what the government will do may risk clashes and losses, but the government knows what it's doing. What needs to be done must be done," he said, speaking on his normal Sunday television slot.
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It was not clear what he meant by "losses."
Earlier, an army spokesman said police had been told to take back an area near the Silom business district controlled by the red-shirted protesters pushing for early elections.
Abhisit has called an emergency cabinet meeting for later on Sunday to discuss the crisis amid speculation martial law could be imposed to clear the supporters of former premier Thaksin Shinawatra, ousted in a coup in 2006.
However, Abhisit appeared to rule that out.
"By law, martial law comes under the armed forces and they have to announce that, if they see it as necessary. But as we've discussed, this instrument is not needed," he said.
Martial law would give troops more freedom to act to end the rally. Under a state of emergency declared in the capital on April 7, the authorities can already use the security forces to ban public gatherings of more than five people, but this has achieved little.
Late on Saturday, army spokesman Sansern Kaewkamnerd told reporters the government had ordered police to regain the area around Chulalongkorn Hospital, near the Silom business district, to ensure public safety.
"Tomorrow the police chief has to continue clearing the area by all means, from talks to the use of force if necessary," Sansern told reporters.
"We believe the police can handle this. If we have to use force, it does not mean that we want to disperse protesters at Rachaprasong junction, but we just want the hospital area back."
OUTRAGE
The "red shirt" demonstrators caused outrage when about 200 of them barged into the hospital grounds on Thursday, looking for soldiers they thought were there preparing an attack.
Their leaders apologized and have moved back part of their barricade in the area to allow better access to the hospital.
However, that appears to be the only concession and around 1,000 demonstrators were behind the barricade by the business district at daylight on Sunday.
There were no more police than normal and no attempt to dislodge the protesters, a Reuters photographer said.
Rachaprasong junction is the ritzy shopping area that the red-shirted protesters have occupied since April 3, prompting the closure of many malls and luxury hotels.
The protest rally is now in its eighth week in the capital and the authorities have found no way to disperse it without the risk of serious bloodshed. Some evenings, tens of thousands of protesters gather in the occupied shopping district.
One bungled attempt to dislodge them from a different part of Bangkok on April 10 ended with 25 people dead and more than 800 wounded.
Another person died in still-unexplained grenade attacks on the Silom business district on April 22 and a soldier died in skirmishes on a suburban highway on April 28.
One conflict resolution body, the International Crisis Group, said the standoff could deteriorate into an "undeclared civil war." It said neutral figures with authority could help prevent a slide into greater violence.
The fault lines are widening between the establishment -- big business, aristocrats, the military brass and the middle class -- and the protesters drawn from the rural and urban poor.
Thaksin lives abroad to escape a jail sentence handed down for corruption.
The crisis has cast a pall over the economy, decimating the tourist industry, closing businesses and depressing consumer confidence. Finance Minister Korn Chatikavanij said on Friday economic growth could be cut by 2 percentage points if it continues all year.
(Additional reporting by Vivek Prakash; Writing by Alan Raybould; Editing by Ron Popeski)
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