But in the late afternoon, most protesters were withdrawing to the area around the prime minister's office, around which thousands others have been encamped since March 26. Troops appeared to be moving in after them.
"We are narrowing the area of unrest. It's going to take time, and we are trying to do cause as little loss as possible." army spokesman Col. Sansern Kaewkamnerd.
Hundreds of soldiers and police assembled at the Royal Plaza, about 1 mile (less than 2 kilometers) from Government House confronting about 100 female protesters who knelt down and screamed "Please stop, brothers." Some hugged the soldiers.
The demonstrators are demanding the resignation of Prime Minister Abhisit Vejjajiva, saying his four-month-old government came to power illegally.
Earlier, the protesters were stationed at a half-dozen points in Bangkok, defying government-imposed state-of-emergency measures that ban gatherings of more than five people.
Protesters commandeered public buses to block several key intersections, set tires and vehicles on fire and sent two unmanned buses, one of them burning, hurtling toward lines of soldiers. The bus swerved and then ricocheted off trees on the side of the road before coming to a halt, with no one injured. The other bus also crashed without injuring anyone.
In one of several confrontations, a line of troops in full battle gear fired volleys of M-16 fire, most of it aimed above the heads of protesters and turned water cannons on the crowd near Victory Monument, a major traffic circle.
Armed forces chief Gen. Songkitti Jaggabatara said on nationwide television that soldiers would use "every means to end the chaos" but employ weapons only for self-defense and not "excessively."
In contrast to a complete security breakdown over the weekend, where a 16-nation Asian summit was canceled after demonstrators stormed the venue, security forces began to take action.
"The shots fired into the crowd were blank bullets. The heads are made of paper, so it only causes sound. We use these when protesters head toward soldiers to push them back. Those fired into the air are real bullets," said Sansern, the army spokesman.
The red-shirted demonstrators are supporters of ousted former Prime Minister Thaksin Shinawatra who want new elections and Abhisit's ouster. They also accuse the country's elite - the military, judiciary and other unelected officials - of undermining democracy by interfering in politics.
Political tensions have simmered since Thaksin was ousted by a military coup in 2006 amid accusations of corruption and abuse of power. He remains popular in the impoverished countryside for his populist policies.
His opponents - many in urban areas - took to the streets last year to help bring down two pro-Thaksin governments, seizing Bangkok's two airports in November for about a week.
Parliament then appointed Abhisit in December after a court ordered the removal of the previous pro-Thaksin government citing fraud in the 2007 elections. Thaksin supporters took to the streets in protest, and their numbers grew to 100,000 in Bangkok last week.
On Sunday night, Thaksin called for a revolution and said he might return from exile to lead it. He fled the country last year, before a court convicted him in absentia of violating a conflict of interest law.
"Now that they have tanks on the streets, it is time for the people to come out in revolution. And when it is necessary, I will come back to the country," he said in a telephoned message to followers outside Abhisit's office.
A mob of the red-shirted protesters smashed cars carrying Abhisit and his aides on Sunday. The secretary-general of Abhisit's office, Niphon Promphan, was dragged from the car and beaten, suffering head injuries and broken ribs.
Abhisit appealed Monday to the demonstrators to return to their homes, saying the government was using "the softest measures possible" against them.
"All the work I am doing is not to create fear or put pressure or to harm any group of people. It's a step by step process to restore order and stop violence," he said on nationwide television.
Government spokesman Panitan Wattanayagorn said the "situation in Thailand is being brought back under control."
Monday's first and most serious clash began before dawn, as troops in full combat gear advanced to disperse the protesters, who were occupying a major junction, according to witnesses.
The soldiers fired hundreds of rounds from their M-16 automatic rifles, with Associated Press reporters saying most appeared to have been aimed over the heads of the protesters. The reporters saw protesters throw at least one gasoline bomb which exploded behind the army line and tear gas floated across the eerie dawn scene.
At the nearby Century Park Hotel, foreign tourists were seen rushing into taxis and heading for Bangkok's international airport. But others seemed unruffled.
"We're from South Africa. We don't scare easy," said Estelle Jones, a tourist from Johannesburg.
France, Britain, Australia, the United States, South Korea and the Philippines were among countries that issued travel advisories Monday, urging citizens to avoid trips to Thailand and for those already in Bangkok to stay in their hotels and away from protests.
The U.S. Embassy issued a warden message urging Americans "to avoid the areas of demonstrations and to exercise caution anywhere in Bangkok."
Dr. Chatri Charoenchivakul of the Erawan Emergency Coordination Center said at least 70 people were injured, most of them from tear gas, while two soldiers and two civilians suffered from gunshot wounds. Another four persons were injured in clashes near Victory Monument, he said.
Monday marked the beginning of the Thai New Year, normally the country's most joyous holiday. The Bangkok municipal government canceled all its festivities, but despite the rioting many Thais and foreign tourists began engaging in the ritualistic water throwing and general partying.
However, all major department stores, malls and jewelry shops in Chinatown shut their doors.
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