ARENDAL, Norway, Aug 12 (Reuters) - Norway's $2 trillion

sovereign wealth fund, the world's largest, posted a 698 billion

Norwegian crowns ($68.28 billion) profit for the first half of

the year, lifted by strong returns among stocks in the financial

industry, it said on Tuesday.

The fund announced on Monday it was terminating contracts

with external asset managers handling its Israeli investments

and has divested parts of its portfolio in the country over the

situation in Gaza and the West Bank.

The fund is due to holds a press conference at 0800 CET

(0600 GMT).

($1 = 10.2223 Norwegian crowns)