A lack of foreign participants in the local foreign exchange market would probably keep the baht relatively stable, although central bank dollar buying to settle forward commitments and yen movements would determine baht direction, dealers said.

The benchmark Thai SET composite stock index finished up 1.80 points, or 0.82 per cent, at 221.85 on Friday. It was up by 4.30 per cent on the week."The market should move sideway up this week due to appearance of some foreign funds and easing interest rates," said Sompong Benjatapanun, an analyst at Adkinson Securities.

Brokers said Thailand may prove attractive to some foreign investors next week as it had bucked the trend of falls in other emerging markets inthe past few weeks.

Some foreign investors believe the Thai bourse has bottomed out, at least temporarily, and have already moved funds into certain blue chip stocks, they said.

Foreign investors had been buying some bank, energy and telecoms stocks and were holding them longer term instead of taking short-term profits, they added.

Signs of a possible US interest rate cut might also encourage some international investors to turn to equity markets offering higher returns, including Thailand, analysts said.

"There is a high possibility that the US rate will be cut in the near future and this would encourage some foreign investors to put their money somewhere other than the treasury safe haven," said Anothai Chiengtawun, an analyst at Thai Sakura Finance and Securities.

Local commercial banks have gradually reduced interest rates since the second-half of this year and many banks now offer fixed deposit rates of less than 10 per cent compared with a high of 17 per cent in the first- half.

"Some majorlocal investors have shifted their money from deposit accounts to the SET as there is not enough interest incentive in bank accounts," said Anothai.

Brokers said Thailand's recent progress in debt restructuring was seen as a supportive factor that would benefit both Thai banks andcorporates.

The market was driven late last week by rallies in some banks that have found, or may find, foreign strategic partners.

These included Thai Danu Bank, Bank of Asia and Nakornthon Bank.But analysts warned that non-performing loans remained a major negative factor for Thai banks, which still required more time to recover.

Chartists saw the SET composite index moving between a support at 210 points and resistance at 240.

The baht, which has been locked in the range of 40.5-41.00 to the dollar over the past two weeks, could edge lower later in the week, dealers have said. The baht traded at 40.59/64 late on Friday.

Dealers said the Bank of Thailand's (BoT) presence in the market, picking up dollars to settleforward obligations, had underpinned the greenback.Lack of volatility in the Thai unit had discouraged speculators, and most recent transactions had been trade-related, dealers said.