Thai bourse keeps trading halt rule on 10 pct fall

BANGKOK, Nov 2 (Reuters) - Finance Minister Korn Chatikavanij said on Monday the Thai stock exchange was sticking to the rule under which trading is automatically stopped when the index falls 10 percent, but a 5 percent fall would now trigger consultations.

Finance Ministry officials met with the stock regulator and the stock exchange to look at ways of managing volatility after rumours in October about the king's health sparked the biggest two-day drop this year in the main stock index .SETI.

"If there's any rumour that causes the market to decline by 4-5 percent, the bourse would have to report this to the central bank governor and securities regulators along with the Finance Ministry," Korn told reporters after the meeting.

The automatic "circuit breaker" that triggers a half-hour suspension in trading "will remain the same" at 10 percent, he said.

"Once they report to us and to the other authorities, then we can let the public know," he added.

Up to now, the 10 percent limit has been the only "circuit breaker" and there was some speculation that the authorities might lower the limit following last month's sharp moves.

On Sunday, police arrested two people on suspicion of spreading rumours about the health of the 81-year-old king that triggered the slide in stock prices in October, police said. [ID:nBKK461703]

Korn said police were investigating whether they had in any way benefited from the market rumours.

Separately, Prime Minister Abhisit Vejjajiva told reporters police had not found any evidence linking politicians with the rumours that had dragged the market down.

The sell-off caused a 7.2 percent plunge in stock prices on Oct. 14 and 15, wiping out 427 billion baht ($12.8 billion) of market value as rumours circulated over the health of King Bhumibol Adulyadej, who has been in hospital since mid-September.

The Department of Special Investigation, which comes under the Justice Ministry, is also conducting an inquiry into possible stock trading irregularities, which it expects to complete in late November.

The king's health is a source of concern since he is seen as the sole unifying figure in a politically polarised country with a long history of coups and upheaval. ($1=33.44 Baht) (Reporting by Kitiphong Thaicharoen; Writing by Ploy Ten Kate; Editing by Alan Raybould)