Thai stocks surge as PM resigns

Thailand's main stock index has climbed to its highest level in more than two years after Prime Minister Thaksin Shinawatra said he would step down.

The embattled premier won 57% of the vote in a snap election on Sunday, but announced he would resign in order to end months of political crisis.

Thailand's benchmark SET index added 3.1% to 768.28 on Wednesday, its highest since January 2004.

The Thai baht also gained, adding 1.2% against the US dollar.

"The positive reaction reflects investors' relief at the political situation," said Adithep Vanabriksha, a fund manager at Aberdeen Asset Management.

Buying more?

Investors bought into Thailand's biggest stocks, with Bangkok Bank and Krug Thai Bank both rising strongly.

Energy shares and construction companies also advanced, with Italian-Thai Development and Sino-Thai Engineering and Construction up more than 6%.

Investors are hoping the political conflict will end and spending begin

"We think sectors related to the government should be good plays, such as those linked with infrastructure projects and consumer demand," Mr Adithep said. "We plan to buy more."

The SET index is up more than 7% this year as investors look to tap into growing consumer demand and optimism that economic growth and infrastructure development will continue.

Defusing the situation

Mr Thaksin, a successful businessman, has been under pressure after his family decided to sell its shares in Shin Corp, one of Thailand's biggest telecommunications firms, for $1.9bn (£1.1bn).

The move opened the prime minister up to accusations that his family has avoided paying taxes, and fanned allegations of corruption and abuse of power.

Many Thais were also angry that a key national asset was handed over to a group of investors from Singapore.

Opposition groups have organised weeks of street protests and vowed to continue the disruption unless Mr Thaksin stepped down.

Speaking on national TV and following a meeting with Thailand's king, Mr Thaksin he said he would remain a caretaker prime minister until a new premier was chosen.