METULLA, Israel — When two Israeli soldiers were captured by Hezbollah on July 12 and the Middle East teetered on the edge of war, the head of the Israeli armed forces was not giving the issue his undivided attention.

Instead, Lieutenant General Dan Halutz was taking time to think about the Tel Aviv stock market. He decided to contact his stockbroker and instructed him to sell $28,000 worth of his investments.

Already facing criticism for his handling of operations against Hezbollah, General Halutz was called on by Knesset members yesterday to resign.

Unnamed staff officers, according to the Israeli newspaper Haaretz, also criticized his behavior, saying he must go. They were angered that his stock market dealing took place as several Israeli soldiers died trying to rescue their captured colleagues.

In a statement, General Halutz confirmed he ordered the sale July 12 but denied any wrongdoing.

“It was my portfolio of shares on which I had lost $5,680,” he said. “It is true that I sold the portfolio on July 12, but it is impossible to link that to the war. At the time, I did not expect or think that there would be a war.”

The admission that he did not expect a war when Israeli warplanes were pounding Beirut hours later did not inspire confidence that he was fully in touch with events.

“When the state was burning, all he cared about was his investment portfolio,” a Labor Knesset member, Colette Avital, said.

[The burgeoning scandal is the latest in a round of recriminations that has seized the Jewish state as different branches of the military and government try to explain Israel’s lackluster military campaign, a staff reporter of The New York Sun reports from Tel Aviv.

Knesset members are already calling for a formal investigation into General Halutz’s pre-war financial dealings.The chairman of the National Religious Party, Zevulun Orlev, yesterday petitioned the country’s attorney general, Menachem Mazuz, to launch an inquiry. And members of the Knesset committee that oversees the military are demanding answers from the general.

“This scandal is very strange. I call the chief of staff to provide a detailed explanation to the public beyond the laconic explanation he has given thus far,” the chairman of the House Committee, Ruhama Avraham, told Israel’s leading newspaper, Yediot Ahronot.

General Halutz has found defenders in Israel’s Cabinet. The chief of Israel’s internal security service, as well as the transportation minister and the environment minister, have all come to the general’s defense, claiming the allegation that he was derelict in his duty as commander of the army is baseless.]