JERUSALEM (Reuters) - Israeli police questioned Prime Minister Ehud Olmert for a seventh time on Friday as part of a corruption investigation that has jeopardized peace talks with the Palestinians and shaken Israel's political system.

Olmert, who denies any wrongdoing, has pledged to step down once his centrist Kadima party chooses a new leader in a September 17 contest in which the leading contenders are Foreign Minister Tzipi Livni and Deputy Prime Minister Shaul Mofaz.

Micky Rosenberg, a spokesman for national police, said "the prime minister will be questioned for a seventh time" in a session that would last about two and a half hours.

Amir Dan, a spokesman for Olmert, said police were questioning him at his official residence in Jerusalem.

Israeli media said police would ask Olmert about suspicions he received a discount to buy an apartment in exchange for favors, and named cronies to a state business authority when he served as trade minister.

Olmert has also been accused of accepting cash envelopes from a U.S. Jewish fundraiser and submitting duplicate travel expense claims while serving in a previous government role.

If Olmert resigns, he would stay on as caretaker prime minister for the weeks it could take his successor to form a new government, which would likely further delay already halting U.S.-sponsored peace negotiations.

On a visit this week, U.S. Secretary of State Condoleezza Rice said she continued to aim for a peace accord before President George W. Bush leaves office in January, though many analysts are sceptical she can achieve a breakthrough.

(Writing by Allyn Fisher-Ilan; editing by Mary Gabriel)

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