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By Apornrath Phoonphongphiphat
BANGKOK, May 15 (Reuters) - Unidentified gunmen attacked anti-government protesters in Bangkok on Thursday, killing two people as Thailand's rival political factions squared off over who should be prime minister.
Protests aimed at ending the influence of ousted former premier Thaksin Shinawatra have brought occasional violence to Bangkok since November, with no sign of any compromise raising concern about possible intervention by the military.
Witnesses said a small group of men armed with guns and grenades attacked protesters near the Democracy Monument in Bangkok's old quarter in the early hours. Twenty-one people were injured.
Paradorn Pattanatabut, a security adviser to the prime minister, said he suspected the attack was a reaction to pressure by the anti-government side to force the Senate to appoint a new prime minister.
"There's dissatisfaction among those who don't agree with the strategy to get a new prime minister," Paradorn said.
Thailand's political log-jam is the latest phase in nearly 10 years of animosity between the Bangkok-based royalist establishment and Thaksin, a former telecommunications billionaire who won huge support among the rural and urban poor.
He was deposed by the military in a 2006 coup and has lived abroad since 2008 but has exerted influence through his loyalists. They include his sister, Yingluck Shinawatra, who lost her job as prime minister last week when the Constitutional Court ruled she had abused power.
Yingluck's caretaker government remains in office and is aiming to organise an election, tentatively set for July 20, in which it is likely to be voted back into power.
The anti-government side, backed by the establishment who see the populist Thaksin as a corrupt crony capitalist and a threat to their interests, want Yingluck's caretaker government deposed and a "neutral" interim prime minister appointed.
Anti-government protest leader Suthep Thaugsuban, a former deputy prime minister in a pro-establishment government, said time was running out for the Senate to act.
"If, by Friday ... the Senate fails to come up with a solution then the people may have to seize power and set up a people's assembly on their own," Suthep told supporters late on Wednesday.
The government sees a general election as the best way out of the crisis that threatens to tip Southeast Asia's second-biggest economy into recession and has even raised fears of civil war.
Acting Prime Minister Niwatthamrong Boonsongphaisan is due to meet the Election Commission on Thursday to fix a date for a rerun of a February ballot that the opposition boycotted and disrupted to such an extent it was declared void.
Thaksin's enemies know the ruling party loyal to him would be highly likely to win another election and they want electoral reform aimed at ending his influence before another vote.
The Shinawatras' "red shirt" supporters, who are holding a sit-in protest on Bangkok's western outskirts, have warned of violence if the caretaker government is ousted.
"Suthep has said he will seize power for the people. Well, if he seizes power then we will take it back," Natthawut Saikua, a leader of the pro-government activists, told Reuters.
The army has a long record of intervening in politics but military chiefs have stayed aloof from this crisis, insisting that politicians must sort out the dispute.
However, more violence would raise the possibility of the military feeling compelled to step in to restore order. (Additional reporting by Amy Sawitta Lefevre; Writing by Robert Birsel; Editing by Paul Tait)