JERUSALEM - ISRAELI Prime Minister Ehud Olmert said on Sunday he would conduct government business as usual despite what he described as vicious rumours about the nature of a new police investigation against him.

'I answered all questions I was asked. I cooperated with the investigators,' Mr Olmert said in his first public remarks about his sudden questioning on Friday by police.

'I have an agenda as Israel's prime minister. I intend to carry on with this agenda.'

Police have not commented on what prompted investigators to question Mr Olmert, who is already under criminal probe in several corruption cases in which he has denied wrongdoing.

Mr Olmert's office said in a statement on Friday he was questioned about funds raised by an unnamed American for municipal and party elections in 1999 and 2002.

The statement did not say whether police suspect Mr Olmert of using the fundraiser's money illicitly.

Mr Olmert successfully ran for reelection as Jerusalem mayor in 1999. In 2002, he ran against then Prime Minister Ariel Sharon for the leadership of the right-wing Likud Party, but lost.

A court gag order has blocked publication of detailed information about the latest investigation. Israeli media have quoted unidentified legal sources and unnamed political officials as saying the suspicions are particularly serious.

'I regret to say that in circumstances over which I have no control, a wave of rumours has swept across the country about the subject of the investigation,' Mr Olmert said at the start of his cabinet's weekly meeting.

Describing the rumours as 'malicious and vicious", he said: 'I promise that when things are made clear by the proper authorities, they will be presented in the right proportion and context, and this will put an end to the rumours.'

Suspicions
Mr Olmert is already under criminal investigation over suspicions he dispensed favours in return for a discount on the 2004 purchase of a Jerusalem home. He is also being investigated over allegations that as trade minister in 2003, he appointed allies to a state business authority.

Last November police concluded there was insufficient evidence to take action against him over his role in the sale of state-owned Bank Leumi when serving as finance minister.

Mr Olmert cleared a major hurdle earlier this year when a state-appointed commission of inquiry into Israel's 2006 war against Lebanon's Hezbollah guerrillas issued a report that did not blame him personally for Israel's failings in the conflict.

Friday's questioning, which was ordered at unusually short notice by Israel's attorney-general, came as he pursues a peace effort with the Palestinians, talks the United States hopes will culminate in an accord before January.

He held talks on Saturday with US Secretary of State Condoleezza Rice, who is back in the region to try to move the negotiations forward, and plans to meet her again on Monday.

Mr Olmert is to have a working lunch with Palestinian President Mahmoud Abbas on Monday after Dr Rice leaves. -- REUTERS