(Recasts with military comment on elections)
By Amy Sawitta Lefevre and Panarat Thepgumpanat
May 29 (Reuters) - Thailand's military rulers held out little hope for early elections on Thursday, a week after the army seized power, saying conditions had to be right and divisions healed before there could be a return to civilian rule.
Army chief General Prayuth Chan-ocha ousted the government of Prime Minister Yingluck Shinawatra on May 22 to end months of protests that had depressed Southeast Asia's second-biggest economy and raised fears of enduring chaos.
"It is the council's intention to create the right conditions ... to put Thailand on the path to free and fair elections," Lieutenant General Chatchalerm Chalermsukh, deputy army chief of staff, told reporters, referring to the junta.
Thailand has become polarised between supporters of Yingluck and her influential brother, deposed premier Thaksin Shinawatra, and the royalist establishment that sees Thaksin and his pro-business, populist ways as a threat to the old order.
Chatchalerm did not elaborate on what conditions were needed for an election, but said the military wanted to see reconciliation and an end to the political rift that emerged after Thaksin won his first election in 2001.
"I want to ask you how long it takes to heal divisions between two groups that has been going on for 10 years?" Chatchalerm said.
"The two sides do not have to love each other but we want the situation to stay calm and peaceful. We need a period of time for all sides to cool down."
The United States and other allies have criticised the coup and called for a quick return to democracy.
Chatchalerm said the army had been forced to step in reluctantly because of six months of debilitating anti-government protests, organised by a pro-establishment politician, Suthep Thaugsuban.
"Administrative paralysis has been devastating for Thailand. It put a strain on Thailand's GDP which became negative for the first time in many years," he said.
Gross domestic product shrank 2.1 percent in the first quarter of 2014, as the anti-government protesters damaged confidence and scared off tourists.
Data on Wednesday showed Thailand's trade shrank in April and factory output fell for the 13th straight month, underscoring the tough job the military government faces in averting recession.
The military has moved quickly to tackle economic problems, notably preparing payments for hundreds of thousands of rice farmers that the ousted government was unable to make.
General Prayuth met a team of advisers for the first time on Thursday to map out a strategy for securing the country and propping up the stumbling economy.
Among his advisers are two powerful establishment figures hostile towards Thaksin, who remains central to the political turmoil despite being ousted in a 2006 coup and now living in self-exile.
The two, a former defence minister, General Prawit Wongsuwan, and former army chief General Anupong Paochinda have close ties to Prayuth. All three are staunch monarchists and helped overthrow Thaksin in 2006.
A Reuters report in December revealed Prawit and Anupong had secretly backed the anti-government protests that undermined Yingluck's government. She was removed by a court on May 7 for abuse of power and the coup ousted the remaining ministers from her administration.
It is not clear what powers Prayuth's advisers will have, but their appointment would suggest little prospect of compromise with the Shinawatras.
Since seizing power the military has detained 200 or more people, although most have now been freed, including Yingluck, Suthep and leaders of pro-Thaksin "red shirt" activists.
Those released have to tell the military of their whereabouts and travel plans and have promised not to organise demonstrations, a military spokesman said.
Despite martial law and a ban on gatherings, small protests against the military takeover have been held daily in Bangkok. They have been rowdy at times but there has been no serious violence.
The military has warned about the spread of what it calls provocative information on social media and on Wednesday Thai Facebook users were shocked when the site went down.
The Information Communications Technology Ministry said it had blocked access at the request of the military to halt online criticism. But the site quickly came back up and a military spokeswoman blamed the interruption on a gateway glitch.
Technology ministry officials are due to met representatives of social media platforms on Thursday "to ask for cooperation".
Former Education Minister Chaturon Chaisang, who was arrested on Tuesday after coming out of hiding to talk to reporters, was denied bail by a military court late on Wednesday, an official at the court told Reuters.
He has been charged with defying a military summons and making statements that might stir unrest.
Chaturon is the first person since the coup to be tried at the military court. He is being held at a Bangkok prison. (Writing by Robert Birsel; Editing by Alan Raybould and Alex Richardson)