By Alan Raybould and Amy Sawitta Lefevre
BANGKOK, March 23 (Reuters) - Supporters of Thai Prime Minister Yingluck Shinawatra say they will take to the streets as moves to impeach her gather pace, raising the spectre of confrontation with protesters who helped scupper a February election she had been expected to win.
The Constitutional Court annulled the election on Friday and the chairman of the Election Commission said it would be months before a new vote could be held, leaving Yingluck at the head of an enfeebled caretaker government with limited powers.
The crisis is the latest chapter in an eight-year battle between Bangkok's middle class and royalist establishment against supporters of Yingluck and Thaksin Shinawatra, her brother, who was ousted as premier by the army in 2006. He lives in Dubai to avoid a jail term for abuse of power.
After months of restraint, Thaksin's "red shirts" supporters are making militant noises under hardline new leaders.
"On April 5, red brothers and sisters, pack your belongings and be ready for a major assembly. The destination may be Bangkok or other places, it will be announced later," Jatuporn Prompan, chairman of the "red-shirts" United Front for Democracy Against Dictatorship, told supporters late on Saturday.
Jatuporn helped organise a "red-shirts" uprising against a previous government that ended in a bloody military crackdown in May 2010. More than 90 people were killed during the protests in central Bangkok. Jatuporn still faces terrorism charges related to the violence in 2010.
In the latest political crisis, 23 people have died and more than 700 have been wounded since November.
Speaking to an estimated 10,000 people in Pattaya southeast of Bangkok, another leader, Nisit Sintuprai, sent a warning to Suthep Thaugsuban, the former oppposition politician who has led the protests against Yingluck since November.
"One big reason why we are on the move again is to tell Suthep that the majority in this country want democracy, want government through elections. We cannot accept a prime minister nominated by your people," he said.
Suthep's People's Democratic Reform Committee (PDRC) wants unspecified electoral changes before any election, aiming to dilute the influence of Thaksin and his massive support among the rural poor in the north and northeast.
Parties led by or allied to Thaksin have won every election since 2001 and Yingluck's Puea Thai Party is widely expected to win any election held under current arrangements.
IMPEACHMENT LOOMS FOR PM YINGLUCK
Suthep's supporters disrupted the election on Feb. 2 and prevented voting in 28 constituencies. The Constitutional Court ruled on Friday that made the ballot illegal because voting is supposed to be held across the country on the same day.
The Election Commission will meet on Monday to decide how to proceed, but it had been reluctant to hold the February election because of the political climate and may push for talks between the opposing sides before setting a new polling date.
It is far from clear that Yingluck's caretaker government can struggle on much longer. The most immediate threat is her possible impeachment for alleged dereliction of duty over a disastrous rice-buying scheme that has run up huge losses.
This scheme bolstered Yingluck's support in a 2011 election but thousands of farmers, normally solid supporters of Thaksin, have demonstrated in Bangkok this year because they have not been paid for their rice.
Yingluck has to defend herself before an anti-corruption commission by March 31 and a decision to impeach her could come soon after that. She could then be removed from office by the upper house Senate, which is likely to have an anti-Thaksin majority after an election for half of its members on March 30.
Some analysts say it will fall to the Senate to then appoint a "neutral" prime minister, probably the type of establishment figure the anti-government protesters have been demanding.
"Independent agencies are being quite obvious that they want to remove her and her entire cabinet to create a power vacuum, claim that elections can't be held and then nominate a prime minister of their choice," said Kan Yuenyong, an analyst at the Siam Intelligence Unit, referring to the courts and the anti-corruption commission.
"If they run with this plan, then the government's supporters will fight back and the next half of the year will be much worse than what we saw in the first half," he said.
VIOLENCE DAMAGES ECONOMY
Encouraged by the dwindling number of protesters and relative calm on the streets, the government lifted a state of emergency on March 19.
But three grenades exploded around midnight on Thursday near the home of a Constitutional Court judge ahead of the election ruling and police said a car bomb went off early on Saturday near a PDRC camp in north Bangkok and near a government administrative complex protesters have disrupted for weeks.
Explosive devices went off in three incidents late on Friday in Chiang Mai province, a Thaksin stronghold, and one person was seriously injured, police said. One target was Boon Rawd Brewery, which makes Singha beer. A member of the family that owns it has been prominent in PDRC rallies.
Consumer confidence is at a 12-year low, prompting the central bank on Friday to cut its economic growth forecast for 2014 to 2.7 percent from 3 percent. In October last year, just before the protests flared up, it had forecast 4.8 percent.
The stock market barely moved after Friday's court decision. Some stock analysts have taken the scrapping of the election as a positive move, believing it will spur negotiations between the political opponents.
Rating agency Standard and Poor's took a different view.
"We believe the Thai court's decision dims prospects for any near-term resolution of Thailand's political split and is in line with our expectations of protracted and possibly increasing political risks," Agost Benard, its associate director of sovereign ratings, said in a statement. (Additional reporting by Aukkarapon Niyomyat and Viparat Jantraprap; Writing by Alan Raybould; Editing by Michael Perry)