Riot police officers stand guard at the gate of the Army Club where Thailand's Prime Minister Yingluck Shinawatra is holding a cabinet meeting in Bangkok January 28, 2014. REUTERS/Nir Elias

By Amy Sawitta Lefevre

BANGKOK (Reuters) - Shots were fired at a Thai army facility where the prime minister was meeting on Tuesday and two people were hurt, an anti-government protest leader said.

Prime Minister Yingluck Shinawatra was meeting the Election Commission at an army complex to try to settle on a date for a general election. The Commission says the government's plan to hold the vote next Sunday is too soon, given the unrest in the country, and wants it delayed by up to four months.

"Someone fired shots. One protester was hurt and the man who fired the shots was hurt too. They have been sent to different hospitals," Chumpol Jumsai, a protest leader who was at the facility in north Bangkok, told Reuters.

The shots were fired far away from where the meeting was taking place and near where about 500 anti-government protesters had gathered.

Yingluck dissolved parliament in December and called the election to try to appease protesters trying to overthrow her. They have rejected the election, wanting political reform before any poll, and on Sunday they prevented advance voting in many parts of the capital.

"Today, we are here to show the government what obstacles lie ahead if it holds the February 2 election," Somchai Srisutthiyakorn, a member of the Election Commission, told reporters as he went into the meeting.

"We believe chaos will ensue ... Our new recommendation is to hold elections within three or four months," he added.

The Commission believes security cannot be guaranteed on February 2. It also says candidates have been unable to register in some constituencies, meaning there would not be a quorum to open parliament even if voting went ahead.

The protesters had gathered at the Army Club compound in Bangkok where Yingluck held a cabinet meeting before meeting the Election Commission.

The protests are the latest eruption in a political conflict that has gripped Thailand for eight years and which is starting to hurt growth and investor confidence in Southeast Asia's second-largest economy.

Data on Tuesday showed manufacturing output fell in December for the ninth month running, with the political woes adding to problems caused by weak exports.

The conflict broadly pits Bangkok's middle class and royalist establishment against the mainly poor, rural backers of Yingluck and her brother, ousted former premier Thaksin Shinawatra.

The protesters want to suspend what they say is a fragile democracy destabilised by former telecoms tycoon Thaksin, whom they accuse of nepotism and corruption. They want to eradicate the political influence of his family by altering electoral arrangements in ways they have not spelt out.

ARRESTS?

As the protest movement drags on into its third month, the government has issued an ultimatum to leaders that they face arrest by Thursday if they do not give up areas of Bangkok they have taken over.

The government has declared a state of emergency in the capital and Labour Minister Chalerm Yoobumrung, in charge of enforcing the decree, said an arrest warrant would be sought against protest leader Suthep Thaugsuban and others on Tuesday.

"If the court issues arrest warrants for the protest leaders at 3 p.m. today, we will start capturing them. Suthep has refused to negotiate with us so we don't know what else to do," Chalerm told reporters.

The government declared the emergency last week but it has shown no sign of using its powers, nor did authorities move to arrest Suthep after earlier arrest warrants were issued.

Suthep has said in return that his supporters would shut down the emergency agency headed by Chalerm within 24 hours.

Ten people have been killed since the protests flared in November, most recently on Sunday, when a protest leader was shot.

There are widespread fears that violence could escalate in the increasingly divisive dispute and that the army might step in. It has staged or attempted 18 coups in 80 years of on-off democracy but has tried to remain neutral this time.

Yingluck is Thailand's fifth prime minister since the populist Thaksin was toppled by the army in 2006 and went into exile two years later to escape a jail sentence that was handed down for abuse of power.

(Reporting by Amy Sawitta Lefevre Writing by Jonathan Thatcher and Alan Raybould; Editing by Clarence Fernandez and Robert Birsel)