Special Report:Thailand's political crisis>>
Anti-government 'red shirt' protesters amass in front of their barricade, built with bamboo poles and tires, as riot police approach them in Bangkok's Silom business district on Friday.
The leader of Thailand's red shirts said on Friday they were ready to open talks with the government to end a prolonged and bloody political impasse.
Veera Musikapong said the group had changed its main demand for immediate dissolution of parliament to a 30-day time frame.
In a statement read before supporters, he also demanded troops be withdrawn from around the protest site and an independent probe into an April 10 clash with protesters that killed 25 people, and Thursday night's grenade attacks.
Meanwhile Thailand's army chief, Anupong Paochinda, told a meeting of his commanders on Friday there would be no crackdown on anti-government protesters camped out in the capital, Bangkok, because it would do more harm than good.
"Launching crackdowns will do more harm than good. Therefore, the army will have to try to raise awareness and understanding on the issue among the general public," his spokeswoman quoted Anupong as saying at the meeting.
Earlier hundreds of Thai riot police confronted anti-government protesters in Bangkok's business district but later pulled back without violence, a day after grenades killed at least one person and wounded 88.
The grenade blasts, close to the night market and racy Patpong bars, came 12 days after clashes killed 25 people following a failed army attempt to evict protesters from a rally site in the country's worst street violence in 18 years.
Thousands of "red shirt" supporters of ousted premier Thaksin Shinawatra remain in a fortified encampment in a ritzy shopping area of central Bangkok, vowing to stay until Prime Minister Abhisit Vejjajiva dissolves parliament for new elections.
Adding to the volatile mix, a new "multi-color" group was planning a demonstration of 50,000 people in Bangkok's old quarter on Friday to demand the red shirts end their rally.
Deputy Prime Minister Suthep Thaugsuban said late on Thursday three people had died in the grenade attacks. The government's Erawan Emergency Center put the toll at 1 dead and 88 wounded, including an American, Australian, Indonesian and a Japanese.
Thailand's currency, the baht, fell and shares dropped 1.4 percent in reaction to the attacks, under performing other Southeast Asian markets. Bond prices rose as investors switched to safer government debt.
Investors who had been buying Thai stocks this week, expecting a solution to the standoff might come in the form of parliamentary dissolution or an army operation to remove protesters, were taking "a huge risk", top broker Kim Eng Securities said in a note to clients on Friday.
The central bank said on Wednesday the crisis was hitting confidence, tourism, private consumption and investment, although exports, which are crucial to economic growth, have not been affected so far by the unrest.
Britain, Australia and the United States have warned their citizens to reconsider travel plans to Thailand, where tourism accounts for 6 percent of the economy.
Indonesian Foreign Minister Marty Natalegawa said on Friday he had called his Thai counterpart, Kasit Piromya, to offer "any assistance" for a dialogue between the conflicting parties.