Thai Prime Minister Abhisit Vejjajiva has appeared on national television to reject a demand from demonstrators that he resign by midday and call elections.
Anti-government protesters in Thailand have gathered outside an army barracks where Mr Abhisit has been holed up. The rally, led by red-shirt supporters of ousted ex-PM Thaksin Shinawatra, is one of the largest in recent years. The protests have been peaceful but two soldiers were hurt when grenades exploded inside another army base.
An army spokesman said the grenades appeared to have been fired into the compound, but said it was not clear who was responsible. Tens of thousands of demonstrators have gathered outside the headquarters of the 11th Infantry Battalion barracks in the north of the Thai capital. Some 50,000 soldiers and police have been deployed in Bangkok, and several thousand extra soldiers have been sent to the barracks to reinforce security.
Flanked by ministers and coalition allies, Mr Abhisit appeared on national television as the protesters' deadline for him to step down passed. "The protesters have demanded that I dissolve the house before midday (0500 GMT) today, but the coalition parties agree the demand cannot be met," he said.
"Elections must be held under common rules and genuine calm. We have to listen to other people's voices, not just the protesters."
Mr Abhisit then left the army base by helicopter, saying he wanted to inspect the traffic. The BBC's Rachel Harvey, who is outside the barracks, says it is not clear where he is now. At the moment the protest is peaceful and good-humoured, our reporter adds.
Thai army spokesman Col Sunsern Kaewkumnerd said security forces wanted to avoid violence.
"We will push out the protesters if they trespass into the base. The final step is that rubber bullets would be fired at them, but the army has no wish to disperse the demonstration," he said. Mr Abhisit is usually based at Government House, but this is now the scene of a huge red-shirt protest camp. As the protesters marched on Bangkok over the weekend, the prime minister moved into the barracks as a precaution.
About 100,000 of the demonstrators held rallies in Bangkok on Sunday.
Political speeches culminated in a video address by Mr Thaksin, who told the crowd they were bringing democracy to Thailand. Mr Thaksin is living in self-imposed overseas exile after receiving a two-year sentence in absentia for abuse of power; his supporters say that case was politically motivated.
The protesters say the present government was installed illegally after Mr Thaksin was ousted in a military coup in 2006, and two subsequent allied governments were deposed by court action. The red-shirt protest leaders insist their movement is non-violent.
They say they are prepared to stay in the capital for five days, to pressure the government into calling new elections. The military has been given extra powers to impose curfews and restrict numbers at gatherings if necessary. The last major protests, in April 2009, turned violent, with two deaths and dozens of people injured.
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