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By Aukkarapon Niyomyat
BANGKOK, Oct 13 (Reuters) - About 300 people gathered at a Bangkok hospital on Thursday where Thailand's King Bhumibol Adulyadej, the world's longest reigning monarch, is in an unstable condition as the government urged jittery stock market investors to ignore rumours.
The palace said in a statement late on Wednesday the king's health had "overall not yet stabilized" and the 88-year-old was on a ventilator and battling a new infection.
It followed a statement on Sunday saying the king was in an unstable condition after receiving haemodialysis treatment.
Well-wishers gathered on Thursday outside Siriraj Hospital, which is near Bangkok's Chao Phraya river.
Some wore yellow, the king's colour, and others donned pink, a colour they believe will bring the king an improvement in his health. Some prayed.
"I was worried so I came here to see for myself," said housewife Thornpan Tornueng, 67.
"This evening I will take part in chanting for the king."
District police commander Rithee Visetkamin said more people were expected to gather at the hospital through the day.
The king has long been seen as a unifying figure in Thailand, which has grappled with political uncertainty in recent years. His health, which is watched closely, is a sensitive subject.
Strict lese-majeste laws mean public discussions of his health and any succession plans are punishable by lengthy jail terms.
Investors in the Stock Exchange of Thailand have sold shares since Sunday's statement from the Royal Household Bureau on the king's health.
The main index fell as much as 6.9 percent on Wednesday to its lowest since March 1, but recovered to close down 2.5 percent, its lowest since the end of May.
It was down 2.1 percent by the mid-day break on Thursday.
Deputy Prime Minister Somkid Jatusripitak said he had asked the Securities and Exchange Commission (SEC) to investigate rumours that had been affecting the market.
"I will tell the SEC to investigate who spread the news and who caused stocks to fall. Foreigners are waiting to pick up stocks and Thais are selling them," Somkid told reporters.
"I don't think it's beneficial to do that because this is an important time for the country and we should not undermine ourselves."
"Don't listen to rumours. Please only listen to the government," he added.
The government on Wednesday urged people to ignore rumours on social media and wait for official announcements. (Additional reporting by Amy Sawitta Lefevre, Panarat Thepgumpanat and Pairat Temphairojana; Writing by Amy Sawitta Lefevre; Editing by Robert Birsel)