By Chor Sokunthea
PREAH VIHEAR, Cambodia (Reuters) - Thai and Cambodian army commanders ended five hours of talks on Thursday with no agreement to withdraw their forces after heavy fighting near a disputed 900-year old temple left two Cambodian soldiers dead.
"We did not make much progress. Troops on both sides will stay where they are," Thai General Wiboonsak Neeparn told reporters after returning to the Thai side of the border.
A Khmer soldier guarding the body of his fallen comrade at Sraem village near the fighting zone.
He said they had agreed on joint border patrols to ease tensions after Wednesday's 40-minute gun and rocket battle, the worst clash in years between the historic enemies.
But his Cambodian counterpart, General Srey Doek, denied any deal over the site, where soldiers backed by armour and artillery faced off in an area controlled a decade ago by remnants of the Khmer Rouge, Pol Pot's guerrilla army.
The Hindu temple has stirred nationalist passions in both countries for generations, but officials on both sides have toned down their rhetoric since the fighting on Wednesday.
"Our policy to resolve this conflict is through negotiations," Thai Prime Minister Somchai Wongsawat told reporters in Bangkok.
Cambodian Prime Minister Hun Sen has kept silent, but his foreign minister urged negotiations, saying the incident was between soldiers and "not an invasion by Thailand."
But people on the streets of Phnom Penh were angry.
"We need to defend our land. We must not lose to the Thais," said security guard Bun Roeun, 36, flicking through newspaper reports of the clashes. "If the Thais continue their attempt to cross our border, I am ready to join the army to fight back."
The confrontation comes amid great political instability and an economic slowdown in Thailand, as protesters in a long-running Bangkok street campaign urge the army to launch a coup against the elected government.
"It's hard to see how Cambodia gains from starting a war with Thailand at this point," said Tony Kevin, a former Australian ambassador to Phnom Penh.
"But if you look at the very tense and riven state of Thai politics, it's easy to see how a Cambodian war could be of interest as a distraction," he said.
China and the United States expressed concern over the violence and urged both sides to use restraint.
DECADES-OLD DISPUTE
Preah Vihear, or Khao Phra Viharn, as the Thais call it, sits on a jungle-clad escarpment overlooking northern Cambodia but has been accessible mainly only from Thailand.
The International Court of Justice awarded the temple to Cambodia in 1962, a ruling that has rankled Thais ever since.
The court failed to determine the ownership of 1.8 square miles (4.6 sq km) of scrub next to the stunning but remote Hindu ruins, which have been off-limits to tourists for months.
The dispute over this small parcel of land became highly politicised in Thailand in July when protesters trying to overthrow the Bangkok government adopted it as a cause.
Bangkok has urged its citizens to leave Cambodia, mindful of the 2003 torching of its embassy and Thai businesses in Phnom Penh by a nationalist mob incensed by a row over Angkor Wat, another ancient temple.
In 2003, Thai commandos flew into Phnom Penh airport in the middle of the night to help evacuate 600 Thais during the riots.
Security was beefed up outside the Thai embassy in Phnom Penh, but there were no crowds outside and it was operating as normal, a Thai official told Reuters.
Several big Thai companies have operations in Cambodia and some have pulled out Thai nationals, but they said operations were normal.
Thailand's political crisis has damaged consumer confidence and consumption at a time when exports are sluggish due to the global economic slowdown.
A top adviser to Thailand's finance minister said on Wednesday the country risked sinking into recession in the first half of 2009 if the political stalemate did not end soon.
(Additional reporting by Nopporn Wong-Anan in Kantaralak, Ek Madra in Phnom Penh, Ed Cropley in Bankgok; Writing by Darren Schuettler; Editing by Alan Raybould)
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