UPDATE 4-Olmert defies calls to resign over bribe probe

(Adds Haim Ramon comments, paragraph 13-14)

By Alastair Macdonald and Adam Entous

JERUSALEM, May 9 (Reuters) - Israeli Prime Minister Ehud Olmert defied a barrage of calls to resign on Friday after he admitted taking cash from an American businessman at the centre of a police inquiry into allegations of bribery.

Olmert, whose departure could disrupt U.S.-sponsored peace negotiations with the Palestinians, pressed on with his duties after telling the nation in a late-night address on Israel's 60th Independence Day that he would resign only if the attorney general could produce sufficient evidence to indict him.

Coalition allies have been conspicuously mute rather than offering public support. But the prime minister, who will host U.S. President George W. Bush next week, looked relaxed when speaking in Jerusalem to Canadians who raise funds for Israel.

He made only an oblique, passing reference to his troubles, saying: "I have enough political issues to deal with here."

"Millions of shekels -- cash in hand," screamed top-selling tabloid Maariv. All media splashed the story after police lifted a gag order imposed when Olmert was quizzed a week ago.

Yet Israelis have grown used to tales of corruption at the top and many noted that Olmert, who last year called himself "indestructible", has ridden out a series of other scandals.

Legal sources say police suspect that Olmert took hundreds of thousands of dollars from a New York Jewish financier over a decade. Morris Talansky was tagged "The Laundry Man" in coded records that investigators say were kept by Olmert's secretary.