UPDATE 3-Fall of Myanmar town to rebels sends people fleeing into Thailand

(Add details of drone attack on Myanmar junta troops that had retreated, paras 14-15)

By Panu Wongcha-um

MAE SOT, Thailand, April 12 (Reuters) - Hundreds of refugees crossed over the river frontier between Myanmar and Thailand on Friday following the fall of a strategic border town to rebels fighting Myanmar's military junta.

Some said they feared airstrikes by the Myanmar military after the rebel capture of Myawaddy, a town of around 200,000 people lying across the Moei River from the Thai city of Mae Sot.

"That's why I escaped here. They can't bomb Thailand," said one woman, Moe Moe Thet San, a Myawaddy resident who stood in line at a border check-point with dozens of people in the heat. She had crossed the border with her young son.

Thailand's foreign minister said on Friday his government was preparing for an influx of refugees and he urged the Myanmar junta to scale back the violence.

Thailand was also working with members of the Association of Southeast Asian Nations (ASEAN) to revive a stalled peace plan for Myanmar, Parnpree Bahiddha-Nukara said.

"It is our neighbouring country and we don't want to see violence," Parnpree told reporters following a visit to Mae Sot. "We want to see them talking with each other. They can use us as a broker if they want."

Myawaddy was wrested from military control by anti-junta forces led by the Karen National Union (KNU) rebel group on Thursday.

Thailand was considering alternative trade routes in case of road closures caused by the fighting, Parnpree said.

A group of less than 200 junta soldiers who had retreated earlier this week from their base to the Thai border were still in the area and Thai authorities had so far not received any requests from them to cross over, Parnpree said.

"They have to drop their weapons, change into civilian clothes before we would allow them to cross over the border," he said.

A group of fewer than 200 junta soldiers who had retreated earlier this week from their base to the Thai border were still in the area and Thai authorities had so far not received any requests from them to cross over, Parnpree said.

"They have to drop their weapons, change into civilian clothes before we would allow them to cross over the border," he said.

This group of junta soldiers sheltering near a bridge came under attack from drones deployed by resistance groups late on Friday, local media reported.

Security in the area was tightened following the attack, with armed Thai soldiers patrolling the riverside and cordoning off some parts under one of the two bridges across to Myawaddy, according to a Reuters witness.

Junta spokesperson Zaw Min Tun told Myanmar media some of its troops had abandoned their base because they were accompanied by their families. Negotiations were ongoing with Thailand, he said.

It was not immediately clear which group of junta soldiers he was referring to and he did not respond to a telephone call from Reuters to seek comment.

Myanmar has been in turmoil since 2021, when the powerful military deposed an elected civilian government, triggering widespread protests it sought to crush with force.

Simmering anger against the junta turned into a nationwide armed resistance movement that is now increasingly operating in coordination with established ethnic rebel groups to challenge the military across large parts of Myanmar.

'AFRAID OF AIR STRIKES'

A steady stream of people fleeing Myanmar queued at a border crossing on Friday amid tight security on the Thai side, including vehicles mounted with machine guns overlooking the Moei river.

"I am afraid of air strikes," said Moe Moe Thet San, aged 39. "They caused very loud noises that shook my house."

The loss of Myawaddy robs the junta, already grappling with an economy in free fall, of vital earnings from border trade while strengthening rebel groups, analysts say.

Myanmar's military may still seek to mount a counter-attack, supported by its air force, to regain the town, said Dulyapak Preecharush, an associate professor of Southeast Asian Studies at Bangkok's Thammasat University.

"So there is a question about possible intensification of fighting in the coming days," he told Reuters.

On Thursday, Thai Prime Minister Srettha Thavisin said the fighting in Myanmar should not spill into his country's airspace.

In an interview with Reuters last week, Srettha said the Myanmar junta was "losing strength" as he pushes to open talks with the military government.

Thailand, which says it is staying neutral in the Myanmar conflict and can accept up to 100,000 people displaced by it, has pursued engagement, including aid deliveries, with its neighbour since Srettha came to power last August.

(Reporting by Panu Wongcha-um in Mae Sot and Reuters staff; Writing by Devjyot Ghoshal; Editing by Clarence Fernandez, Kanupriya Kapoor and Angus MacSwan)