A mass anti-government rally in Thailand appears to be fizzling. Tens of thousands have returned to their farms. They drew nowhere near the promised million protesters. The premier rebuffed their demands for elections.

But dismissing it as a failure could be a mistake.

What's changed in the week since the mostly rural supporters of ousted prime minister Thaksin Shinawatra began their million man march into Bangkok?

Thaksin's red-shirted protesters, vilified as a thuggish mob after their street insurrection in Bangkok nearly a year ago, have won some credibility as a non-violent political movement that is in the fray for the long haul, independent analysts said.

The red shirts, trying to force Prime Minister Abhisit Vejjajiva to call an early election, splattered gallons of their own blood outside his residence on Wednesday in a dramatic demonstration to show their sacrifice for democracy.

But the public relations stunt, which drew howls of outrage from public heath professionals, put them no closer to polls that must be held by the end of 2011.

They are well placed to win any election anyway -- Thaksin-affiliated parties have won every election the past decade -- and that could herald deep change for Southeast Asia's second-biggest economy and its recent surge of investors.

The size of the protest, the show of emotion and discipline, has been impressive, and Thai people will have got the message quite strongly, said Chris Baker, a Thailand-based author who has written several books about Thaksin.

The tendency to dismiss the 'red shirts' will diminish from this point on. There's an upsurge that's really a lot bigger than people imagined, and anyone who says this protest was a failure is just kidding themselves.

Federico Ferrara, a political science professor at the National University of Singapore, said the rally could garner some support from Bangkok's politically powerful middle classes by softening the image of a movement widely blamed for Thailand's worst street violence in 17 years last April.

A mobilisation of this number of people from the provinces, against a scare-mongering government that did everything in its power to stop them, is somewhat unprecedented, he said.

They've been portrayed as barbarians coming to tear up the capital, but that didn't happen. They came to Bangkok to show they're legitimate. Mission accomplished.

However, in a front page analysis on Wednesday, the anti-Thaksin Nation newspaper countered that view, suggesting the red shirts lacked coordination and were becoming increasingly divided, with Thaksin not totally in control.

FRACTIOUS MOVEMENT?

His entire political movement had been fractious but the problems may become glaring once the 'red shirts' make their retreat, it said. Many of the 'red shirts' will be going home not quite knowing what they were in the city for.

In the near term, the peaceful rally and the red shirts shift in philosophy toward non-violence give a green light to investors betting Thailand's export-fueled economic recovery will propel further gains in a stock market <.SETI> that has surged 73 percent in the past 12 months.

Charl Kengchon, economist at the Kasikorn Reseach Centre, says the central bank will likely bring forward an expected interest rate rise that could have been delayed by unrest.

Another Kasikorn economist, Pimonwan Mahujchariyawong, said the political situation had improved and her economic growth forecast for this year would be revised upwards from 3-4 percent.

If the protest takes only a week and will not lead to a change in government, it's likely that we will raise our growth forecast to 3.5-4.5 percent as economic fundamentals are quite positive, Pimonwan said.

As a sign of investors' enthusiasm, Thai stocks -- among the cheapest in Asia -- leapt nearly two percent on Wednesday, supported by aggressive buying by foreign investors who have snapped up $900 million of Thai shares in just over two weeks.

Protests will return, but we've seen they can be handled, Charl said. This is a positive development for the economy and investors will be bullish in the short term.

COUNTRY FOR THE FEW

However, if the grassroots movement picks up pace, it will likely remain on a collision course with a traditional, urban-centred power-clique with an almost visceral hatred of Thaksin, a graft-convicted, multi-millionaire beloved by the rural poor who elected him twice in landslides.

Results of previous elections have shown Thais are broadly traditional voters and analysts believe the rural masses in the vote-rich north and northeast will back Puea Thai, the latest incarnation of Thaksin's electoral juggernaut.

That poses medium-term risks in a country where recent tight coordination between fiscal and monetary policies has been widely applauded, and where Oxford-educated Finance Minister Korn Chatikavanij, a close ally of Abhisit, has drawn praise from foreign investors for aggressive fiscal stimulus measures.

Korn, a vocal critic of Thaksin, was honoured last month by the Financial Times' Banker magazine as Global Finance Minister of the Year. His policies emphasising a service-based economy run counter to Thaksin's vision, suggesting any change of government would likely entail a significant policy shift.

Adding to the risk are fears of another intervention by the judiciary or the military if Thaksin's allies win the election, as many expect, given the loyalty of his rural backers.

Another removal of an elected government could be the final straw for Thaksin's supporters, raising the risk of violent confrontation. With compromise unlikely and a hardening of stances on both sides, the crisis is likely to drag on.

I've lived through years of Thailand going back to becoming a country for the few, said Rung Suramanee, a 76-year-old red shirt from Mukdaharn, a Thaksin stronghold. I'm ready to sacrifice anything for majority rule to return.

The red shirts aim not only to topple the government. In recent months, they have stepped up a campaign to rid Thailand of an unelected establishment elite, comprised of big businessmen, royal advisers, army generals and judges, who they say have undermined governments elected by the majority of voters in the country of 67 million people.

Thaksin, who led or backed those governments, said on Monday Thai elites were like falling trees and urged his supporters to be patient and to not lose heart in what will be a long struggle.

Political analyst Suranand Vejjajiva said that would depend on their resources and ability to keep up the momentum.

The question is if they can transform into a real political movement, he said. It will be very difficult, but they now have the opportunity to become a credible political force. (Additional reporting by Ambika Ahuja and Orathai Sriring; Editing by Jason Szep and Bill Tarrant)

Thailand