By Aukkarapon Niyomyat and Amy Sawitta Lefevre
BANGKOK (Reuters) - Thailand's King Bhumibol Adulyadej, the world's longest-reigning monarch who was seen as head of an institution central to Thai identity and as a father-figure to the nation, died in hospital on Thursday, the palace announced. He was 88.
King Bhumibol reigned for seven decades after ascending the throne in 1946. His loss will be deeply mourned in Thailand, where he was regarded as a pillar of stability during decades of political upheaval and rapid development.
The palace did not give a cause of death but he has been sick in hospital with various ailments for much of the past year.
"His Majesty has passed away at Siriraj Hospital peacefully," the palace said, adding he died at 15:52 (4.52 a.m. ET).
His son, Crown Prince Maha Vajiralongkorn, is expected to become Thailand's new king.
Prime Minister Prayuth Chan-ocha addressed the nation shortly after the announcement of the king's death to say an heir to the throne had been designated since 1972 and that the government would inform parliament of the choice.Prayuth did not identify the heir but King Bhumibol designated Prince Vajiralongkorn, 64, the heir apparent when he invested him as the crown prince in 1972.
The assembly was due to hold a special session later on Thursday.
Prayuth, wearing a black suit and tie, urged Thais to love one another and protect "the father's land."
More than 1,000 people gathered at the hospital where the king had been staying. Many of them started to cry as the news of his death broke.
Most Thais have known no other monarch and his picture is hung in almost every house, school and office across the kingdom. Until his later years, he was featured on television almost every day, shown visiting poor areas and working on development projects.
"LIKE OUR DAD"
Parichart Kaewsin, 35, who works in a bank, stood at the edge of the hospital garden, gazing up at the top floor of the building where the king was treated.
"I knew he was sick but I still can't believe this day has come," she said, choking back tears.
"That's why I came here - to hear for myself." She said it was like a member of her family has died, she said. "He was like our dad."
U.N. Secretary-General Ban Ki-moon said he hoped Thailand would honor the king's legacy of commitment to universal values and respect for human rights, his spokesman said in a statement.
U.S. President Barack Obama offered condolences to the Thai people and the king's family.
"His Majesty was a tireless champion of his country's development and demonstrated unflagging devotion to improving the standard of living of the Thai people," Obama said in a White House statement.
Anxiety about the king's health and the succession has formed the backdrop to over a decade of political upheaval that has included two coups.
He was seen as a force for unity, and there have long been concerns that without him the country's divisions could worsen.
That seems unlikely under the military government of Prime Minister Prayuth Chan-ocha, who has kept a tight grip on power since toppling an elected government in 2014.
THE CROWN PRINCE
Prince Vajiralongkorn has yet to command the respect and adoration that his father drew after a lifetime on the throne.
He has kept a lower profile than King Bhumibol for most of his life but in the past two years he took on more of the public duties the king was no longer able to perform. The prince divorced his third wife in 2014.
Thailand's strict lese-majeste laws have left little room for public discussion about the succession. It has been so long since Thailand has had a succession, there is no modern precedent.
Queen Sirikit, 84, has also been in poor health over recent years.
Prayuth said civil servants would observe mourning for a year. He also urged Thais to refrain from "festivities" for 30 days. Flags would fly at half-mast at all government buildings and schools for 30 days, he said.
A royal cremation is expected to take months to prepare. When the king's sister died in 2008, a 100-day mourning period was declared. She was cremated 10 months after her death.
The heir's coronation will not take place until the mourning period is over.
Some Bangkok residents reported bars closing after the announcement but it was not clear if all of the city's famous night spots had shut early.
Thailand is unlikely to face major economic disruption after the death of the king, some risk analysts and diplomats said.
The military government might postpone to 2018 a general election scheduled for next year, and Thai stocks and the baht currency are likely to be volatile in the short term, the Eurasia Group of risk analysts said in a report issued before the announcement.
But given a smooth transition, major disruption is not expected, it said.
The Stock Exchange of Thailand's benchmark index .SETI fell as much as 6.9 percent on Wednesday, as rumours of the king's deteriorating health spread, to its lowest since March 1, but recovered to close down 2.5 percent.
It closed 0.47 percent up on Thursday before the announcement of the king's death.
(Additional reporting by Andrew R.C. Marshall, Amy Sawitta Lefevre, Panarat Thepgumpanat, Pracha Hariraksapitak, Patpicha Tanakasempipat and Pairat Temphairojana; Writing by Amy Sawitta Lefevre; Editing by Robert Birsel and Bill Tarrant)