Thai Prime Minister Abhisit Vejjajiva proposed on Monday to hold an election on November 14 under a 'reconciliation' plan aimed at ending a two-month political crisis that has paralyzed Bangkok and killed 27 people.

Abhisit had previously said he was willing to call elections in December, a year early.

It was unclear whether thousands of 'red shirt' protesters occupying Bangkok's main commercial district to demand parliament be dissolved and an election held within three months would agree to the compromise offer.

'This is quite constructive and we want to engage in a constructive dialogue. So we will be discussing the prime minister's proposal seriously,' Weng Tojirakarn, a protest leader, told Reuters.

He said the protesters would discuss the proposal on Tuesday. Another protest leader, Jatuporn Prompan, said he was encouraged by the offer but that it contrasted with recent military statements warning the red shirts to end their campaign.

Analysts say both sides want to be in power in September for two critical events - a reshuffle of the powerful military and police forces, and the passing of the national budget.

The British-born, Oxford-educated Abhisit is under intense pressure to end the stalemate that has choked off tourism and prompted the International Crisis Group to warn Thailand could slide into an 'undeclared civil war.'

He set five broad conditions for national reconciliation that he said must be met for an election to take place.

The monarchy, he said, should not be dragged into politics and 'should not be violated.' The second condition calls for reforms to address social injustice. The third calls for an independent body to monitor media to ensure unbiased reporting.

The fourth is the setting up of a fact-finding committee to investigate recent political violence. And the fifth is a possible, unspecified constitutional amendment.

It was not immediately clear how each condition would be addressed in practice. They were written in broad enough language to appeal across the political spectrum, suggesting the potentially contentious issue would likely be the date itself.

'I think if the national reconciliation process is successful and the country peaceful, an election can be held on November 14,' Abhisit said in a televised statement.

The finance minister said last week the protests could cut growth by 2 percentage points if they continued all year. The unrest could also delay an expected interest rate rise in June, say economists, pointing to government data on Monday showing inflation slowing in April, reducing the need for a rate rise.

'Our conviction in a call for a rate hike in June is being eroded as the political unrest is prolonged,' said Vishnu Varathan, an economist at independent research house Forecast.

Thailand's financial markets, closed for a market holiday on Monday, have underperformed regional peers since April 10, when the protest turned deadly with a gunbattle in the heart of old Bangkok that killed 25 people and wounded more than 800.

Over the past month, the benchmark SET index lost 3.1 percent, compared with a 1.1 percent rise in Asia's markets outside of Japan, making Thailand Asia's poorest performer as foreign investors sold $155 million of Thai stocks.

Last week the baht currency suffered its largest weekly loss since January.

On Monday, thousands of the red-shirted supporters of ousted Prime Minister Thaksin Shinawatra remained in their 3 sq km fortified encampment.

Army spokesman Sansern Kaewkamnerd told reporters the security forces could use armored vehicles to disperse the protesters, but did not indicate when such a move might happen.

'Armored vehicles will be sent in to ensure safety for troops and police,' he said. 'These vehicles will allow us to move to protesters without using arms if not necessary.'

The mostly rural and urban poor red shirts say Abhisit lacks a popular mandate after coming to power in a controversial parliamentary vote 17 months ago and heading a coalition cobbled together with help from the military.

The crisis underscores a widening fault line in Thai society between the establishment -- big business, royalists, the military brass and the urban middle classes -- and the protesters who broadly back Thaksin, who lives abroad to escape a jail sentence handed down for corruption.-Reuters