BANGKOK, Oct 16 (Reuters) - Thailand's government and its Securities and Exchange Commission (SEC) announced on Friday plans to take legal action against people found responsible for rumours that triggered a plunge of Thai stocks this week.
Prime Minister Abhisit Vejjajiva told reporters the Stock Exchange of Thailand should work with the stock market regulator to find those behind rumours that, brokers said, raised concerns over the health of revered King Bhumibol Adulyadej.
King Bhumibol, the 81-year-old world's longest reigning monarch, has been treated at Bangkok's Siriraj Hospital since Sept. 19 for fever, lung infection and a loss of appetite.
This week, the Thai royal household said he was recovering from pneumonia.
"We need to check and trace the source of the rumours, and then determine whether we could establish the links. This is a job of a responsible supervisory unit of the stock exchange which I believe is already doing its job," Abhisit said.
"It should be up to the discretion of individual investors whether to believe rumours," he said.
A heavy selloff by local institutional and foreign investors triggered a combined 7.2 percent plunge of stock prices on Wednesday and Thursday, wiping out 427 billion baht ($12.8 billion) of market value.
Brokers said market sentiment improved on Friday after Abhisit's comments about the rumours with the composite SET Index rebounding 3.5 percent.
SEC Secretary General Thirachai Phuvanatnaranubala said on Friday his agency was approached by police to investigate the source of the rumours and any trading irregularities.
He said an initial probe did not produce any evidence of irregularities as the two-day market fall was widespread and not confined to any particular stocks. (Reporting by Vithoon Amorn. Editing by Jason Szep)