Thailand's influential former prime minister Thaksin Shinawatra, a powerful backer of the largest party in the governing coalition, avoided pre-trial detention for allegedly insulting the monarchy after a criminal court granted him bail on Tuesday.

Separately, the Constitutional Court set July 3 and July 10, respectively, as the next hearing dates for two cases involving the opposition Move Forward party and the incumbent prime minister Srettha Thavisin.

Srettha, a political novice who took office last year, faces potential dismissal over a cabinet appointment.

The Move Forward party, which won last year's closely fought election but was unable to form a government, could be dissolved for its campaign to amend the royal insult law.

Thaksin, Srettha and Move Forward deny any wrongdoing.

The Constitutional Court also ruled that an ongoing selection process for a new upper house, which started earlier this month, is lawful, clearing the deck for 200 new lawmakers to take over from a military appointed senate later this year.

The court cases, which risk deepening a decades-old rift between the conservative-royalist establishment and its opponents, such as the populist ruling Pheu Thai party and the Move Forward party, have raised the spectre of political instability and rattled markets.

Thailand's main stock index (.SETI), opens new tab, which dropped to its lowest level since November 2020 on Monday, gained more than 1% on Tuesday morning before trimming gains.