The Thai army cracked down on anti-government protesters on Monday, firing warning shots at a major junction in the capital at demonstrators who responded by hurling petrol bombs, witnesses said.

At Din Daeng intersection, Bangkok's biggest, troops repeatedly charged small groups of protesters to clear a major road leading out of the city as Thailand began a three-day New Year's holiday on Monday.

Prime Minister Abhisit Vejjajiva declared a state of emergency in Bangkok on Sunday after red-shirted supporters of former prime minister Thaksin Shinawatra forced the cancellation of an Asian summit in the southern beach resort of Pattaya.

A Buddhist monk with a megaphone stood in the intersection pleading for calm and telling the soldiers: "Don't shoot, think about your country."

Fires from petrol bombs blazed in the streets, and ambulances and firetrucks were at the scene. Police on motorbikes were shuttling between troops and demonstrators to mediate.

Troops fired repeatedly into the air as they charged the demonstrators, a Reuters reporter said.

Army spokesman Colonel Sansern Kaewkamnerd said troops in vehicles with loudspeakers had asked the "red shirts" to lift a blockade they have maintained for several days at the junction, but they did not respond.

By around 7:30 a.m. (0030 GMT), the action had calmed down and the two sides were in tense standoff, but water cannon were being rolled up to the scene, the Reuters reporter said.

More than 10 soldiers had been wounded, mostly from being hit by buses driven by the protesters, he said.

An official at the government emergency medical service told Reuters they had treated 76 people.

A number of protesters had been arrested, Sansern said.

One "red shirt" on a motorcycle and holding a wooden stake said defiantly: "We won't go. We're doing this for the people."

HUMILIATED AT SUMMIT

Some 20,000 "red shirts" remained at Government House, about 4 kms (2.5 miles) from the junction, where they have been demonstrating for nearly three weeks demanding Abhisit resigns.

Several stopped a Reuters reporter there, telling him: "They're killing our people," referring to false rumors that the firings at the Din Daeng junction had been deadly. 

Thaksin's supporters say Abhisit only became premier last December because of parliamentary defections the army engineered. They want new elections, which they would be well placed to win.

Abhisit had threatened on Sunday to take tough action against protesters, who then began gathering in force in Bangkok.

He had been humiliated before his Asian peers when Thaksin supporters bowled over riot troops at the summit in Pattaya and smashed their way into meeting venue. Some leaders had to flee by helicopter.

The canceled Asian summit and now the heightened tensions in the capital have undermined confidence in the government and dealt another blow to the economy, still reeling from political chaos last year and the global financial crisis, analysts said.

Troops fired into the air on Sunday when anti-government protesters stormed the interior ministry. The crowds mobbed the prime minister's car and beat it with clubs as he drove away from the ministry.

Thaksin, who has been making nightly phone calls to his supporters from exile, said on Sunday it was now the "golden time" to rise up against the government.

He repeated his call for a "people's revolution" and said he was ready to move back to Thailand to lead a people's uprising if there was a coup.

Thailand has seen 18 coups since 1932 and another one is certainly a possibility if there is blood in the streets.

The chaos in the capital is bound to further hit the tourism sector, one of Thailand's biggest foreign exchange earners, and several countries have already warned against traveling to the kingdom.

(Additional reporting by Alan Raybould, Vithoon Amorn, John Ruwitch and Kittipong Soonprasert; Writing by Bill Tarrant; Editing by Sanjeev Miglani)