By Gwladys Fouche

OSLO/ARENDAL, Norway (Reuters) -Investments in Israel have taken centre stage in Norway's election campaign, sparking an unusually public debate over how the world's largest sovereign wealth fund operates.

The row could help sway which political party leads Norway's next government as the Sept. 8 election race is tight.

Right-wing parties - the Conservatives, Progress Party, Liberals and Christian Democrats - are currently seen winning 85 seats - just one above the number needed to secure a majority in parliament, an average of all polls conducted in August compiled by pollofpolls.no showed.

Turning up the heat on the incumbent Labour party, the left-wing Socialist Left this week said it would only support a future Labour government if it divested from all companies involved in what it called "Israel's illegal warfare in Gaza".

Labour rejected the demand, but it may be difficult to reject such calls after the election.

WORST EVER CRISIS

"This is my worst ever crisis," fund CEO Nicolai Tangen told Swedish daily Dagens Industri on Friday.

"This is a serious situation because it is about trust in the fund."

In an interview with Reuters last week Tangen ruled out stepping down, saying he had carried out the fund's mandate, as decided by parliament.

Since June 30, the fund has divested from 23 Israeli companies following media reports it had built a stake in a jet engine company that provides maintenance for Israeli fighter jets.

During the war prior to that the fund had divested from just two Israeli companies.........

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