BANGKOK (Reuters) - Thailand took a tough stand against anti-government protesters on Sunday, rejecting demands for U.N.-supervised talks and calling on their leaders to surrender on the fourth day of deadly clashes with troops.

The government doused hopes of a compromise to end fighting that has killed at least 31 people, all civilians, and wounded 230, transforming one of Asia’s most dynamic cities into a battleground and raising the risk of a broader conflict.

“We cannot retreat now,” Prime Minister Abhisit Vejjajiva said in a televised statement, encapsulating the government’s all-or-nothing campaign to end two months of protests seeking to topple his fragile, ruling six-party coalition.

The mostly rural and urban poor protesters, supporters of ousted premier Thaksin Shinawatra, accuse the government of colluding with the royalist elite and meddling with the judiciary to bring down two Thaksin-allied governments.

Analysts and diplomats said the military appears to have underestimated the resolve of thousands of “red shirt” protesters barricaded in 3 sq-km (1.2 sq-mile) district of luxury hotels and shopping malls for six weeks.

“Unless the government cracks down and does so decisively -- and that’s a big if -- we are going to be seeing rioting and guerrilla warfare, possibly spreading out to other areas,” said an Asian diplomat who declined to be identified.

That was already starting to happen.

A state of emergency has spread to more than a quarter of the country after emergency decrees were declared in five more provinces on Sunday, bringing the total to 22, as violence erupted in the north and northeast, a Thaksin stronghold home to just over half of Thailand’s 67 million people.

In Ubon Ratchathani province, protesters burned tires on several roads. One group tried to break into a military compound but were forced back by soldiers firing guns in the air.

“The potential for a broader civil conflict is high,” said Federico Ferrara, a political science professor at the National University of Singapore.

“It is conceivable they might have an even worse problem on their hands after they have ‘cleansed’ Bangkok of the red shirts --- especially if they have to massacre hundreds of people in the process,” he added.

At least 60 people have died and more than 1,600 have been wounded since the red shirts began their protests in March, according to government figures.

URGE U.N. TALKS

A red shirt leader, Nattawut Saikua, called for a ceasefire and U.N. moderated talks to end the violence that began on Thursday evening with an attempted assassination on a renegade general advising the red shirts, who was shot in the head.

“We have no other condition. We do not want any more losses,” he told supporters.

But the government swiftly dismissed the offer. “If they really want to talk, they should not set conditions like asking us to withdraw troops,” said Korbsak Sabhavasu, the prime minister’s secretary-general.

As fighting raged in two areas of the city of 15 million people, residents hoarded food at supermarkets, stayed indoors or fled to escape neighborhoods transformed into battlegrounds.

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“Rejection of any ceasefire talk is very ominous,” said political scientist Vienrat Nethito at Chulalongkorn University. “This pretty much guarantees fighting will continue and the city will be even closer to the brink of civil war.”

The most severe fighting took place in the Bon Kai area of Rama IV, a major artery to the business district. Troops and snipers fired semi-automatic weapons as protesters hurled petrol bombs and burned kerosene-soaked tires to camoflauge themselves.

Intense gun shots and explosions were heard well into the night on Sunday. A commercial building on Rama IV was ablaze.

Some wounded protesters were taken to hospital on the back of motorcycles, witnesses said, as medical rescue workers stayed clear of some of the most violent clashes after two were killed.

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Monday and Tuesday were declared public holidays, but banks and financial markets would remain open.

Some women, children and the elderly at the encampment the red shirts have occupied the past six weeks are trickling into a nearby Buddhist temple for safety. The government is seeking cooperation with protest leaders to dispatch Red Cross workers and other human rights volunteers to persuade people to leave.

“We will not flee,” Jatuporn Prompan, a protest leader, told supporters in their 3.5 sq-km (1.2 sq-mile) encampment, where at least 5,000 remain, including women and children, barricaded behind walls of tires, poles and concrete.

Abhisit briefly threatened to impose a curfew, a rare and jarring event for a city known for raucous nightlife, saying it could help isolate the area.

Thousands of protesters were rallying in a separate area in working-class Klong Toey area near the fighting on Rama IV Road. A new protest site would vastly complicate attempts to end the protests and resolve a crisis that has battered the economy.

ONE-SIDED BATTLE

As Bangkok braced for more unrest, many residents hoarded food and other supplies from grocery stores.

“We don’t know how much longer this nightmare is going to last and how far it will spread,” said Panna Srisuwan, a Bangkok resident waiting in line at a supermarket. “I am stocking up for the rest of the week.”

Soldiers can shoot if protesters come within 36 meters (120 ft) of army lines, said army spokesman Sansern Kaewkamnerd, adding more soldiers were needed to establish control.

The government insists that some of the protesters are armed with grenades and guns and showed footage on national television in an attempt to bolster their case.

Five journalists have been shot, though one escaped unwounded because the bullet deflected off his flak jacket.

Many protest leaders now face terrorism charges that carry a maximum penalty of death, raising the stakes in a crisis that has stifled Southeast Asia’s second-biggest economy and choked investment in one of Asia’s most promising emerging markets.

The government’s strategy of starving protesters out of their encampment was showing signs of having an effect. Supplies of food, water and fuel were starting to run thin as the red shirt delivery trucks were being blocked.

But red shirt leaders said they had enough to last for days.