NEW YORK (MarketWatch) -- Thailand's political crisis deepened further Friday, as anti-government protests continued for a fourth day and the prime minister said he might impose a state of emergency.
Political turmoil is likely to weigh on investor sentiment toward Thailand's stocks and currency, which have posted declines this year.
In Bangkok on Friday, Thai police, using tear gas, dispersed several thousand anti-government protesters who were besieging city police headquarters, while Prime Minister Samak Sundaravej said he may declare a state of emergency if the crisis deteriorates further, the Associated Press reported.
The protesters, who are led by the People's Alliance for Democracy, demand the ouster of Samak and accuse him of being a puppet of Thaksin Shinawatra, the former prime minister who was ousted in a 2006 coup and faces several corruption cases, the AP reported.
PAD supporters also staged protests outside of Bangkok, disrupting parts of the railway and airline services, according to the AP.
Friday's escalation of tensions comes after widespread anti-government protests on Tuesday, since when PAD members have occupied Government House in Bangkok.
"It is extremely difficult to predict where and how this stand-off will play out over the next few days," said Kristina Kazmi, Asia analyst at Global Insight.
Although a new coup "does not seem an imminent risk, given the low support for the PAD among the population at large, the unrest does highlight that the political crisis that emerged in 2005 is far from over," Kazmi said in a research note.
After falling earlier in the session, the benchmark Stock Exchange of Thailand (SET) index closed up 0.2% to 684.44 points on Friday.
Thai stocks down 20% this year
Like most other emerging markets, Thai stocks are deeply in the red year-to-date. The SET index has fallen 20% this year. In comparison, the MSCI Emerging Markets Index has declined 23%......