"circulate rumors" is a correct and usable phrase in written English
It means to spread rumors or information, often through gossip or conversation. Example: The office was in chaos after someone began to circulate rumors about the boss being fired.
According to testimony, it was Specialist Fisher who first began to circulate rumors about Private Winchell's orientation after taking him to a bar in Nashville frequented by transvestites.
I could go on, about things like how our two pet dogs always sleep in front of our vehicles, so before a combat patrol we have to wake up or drag these lazy dogs out of the way, or how the wives' club still manages to circulate rumors about and to us from half way around the world while we're in a combat zone.
Paranoid Devils fans circulated rumors that Putin himself was subsidizing the deal.
Around that time, opposition activists circulated rumors that the general and several other top officials had been fatally poisoned.
(He also refutes widely circulated rumors that Paramount set him up in an office on the lot to finish the book).
Her enemies circulated rumors that Thomas Jefferson had sold her sexual services, and they attacked her as "Queen Dolley" for her aristocratic pretensions.
Siemens denied widely circulated rumors that the German electronics giant is looking to buy Cabletron cs, the computer networking company.
But according to circulating rumors, as well as DigiTimes from Taiwan, Apple has a 15.4-inch MacBook in the works.
After months of circulating rumors, Google announced plans to offer its own wireless cellular service, Project Fi. 10.
Based on unsubstantiated but largely circulated rumors around Firefox search revenue, the two companies can expect $2-3 2-3 user per year from the partnership.
