NAIROBI, July 6, 2008 (AFP) - Kenya's Finance Minister Amos Kimunya on Sunday said he would rather die than resign over in a controversy over a hotel sale, despite growing pressure for him to leave the cabinet.

The row, over whether the minister sold off Nairoibi's Grand Regency Hotel below the market price, has the potential to split the fragile power-sharing government of President Mwai Kibaki, of whom Kimunya is a close ally, and Prime Minister Raila Odinga.

In an unprecedented move last week, parliament voted a no-confidence motion against Kimunya over allegations of corruption in the sale of the luxury hotel. Kimunya denies any wrongdoing.

'One thing I am not prepared to do and I will not do, I will not resign. I will rather die than resign,' Kimunya told a rally in central Kenya.

Kimunya, 46, has been at the helm of East Africa's largest economy since 2006 and is seen as a member of President Mwai Kibaki's inner circle.

He added that he would however resign from parliament if Attorney General Amos Wako presented evidence of his involvement in corruption.

In return other officials involved in the saga; namely, Prime Minister Raila Odinga and Lands Minister James Orengo and anti-graft chief Aaron Ringera, must 'step aside' to pave the way for investigations, he added, signalling the party political divide over the affair.

Odinga, who is chairing a ministerial probe team into the scandal, 'categorically denied and condemned' Kimunya's claims that he was briefed before the hotel was sold and he gave his approval, his spokesman Salim Lone said.

Lone added that Odinga was informed after the hotel had been sold.

Under Kenyan law Kibaki can fire Kimunya if he refuses to resign. Parliament has said it will not accept any government business handled by the embattled minister.

Leaked government documents suggest the hotel was sold for 1.8 billion shillings (28 million dollars/18 million euros) but Kimunya maintained during his defence in parliament that it was sold for 2.95 billion shillings (45 million dollars.)

The issue, which has sparked national outrage, has split the fragile coalition government made up of Kibaki's Party of National Unity and Odinga's Orange Democratic Movement.

Commentators have predicted that the scandal-tainted exit of a close Kibaki ally could shake up the fragile government coalition formed as a result of a February 28 power-sharing agreement.

After general elections in December, then opposition leader and pre-poll frontrunner Odinga had accused Kibaki of rigging his way to re-election.

The dispute sparked protests and a cycle of ethnic violence and revenge killings that left at least 1,500 people dead and displaced hundreds of thousands, but ended in the power-sharing deal in which Kibaki kept his job and Odinga was named prime minister.

Kenyan newspapers weighed in, urging Kibaki to fire the minister, warning that the stalemate was dealing a blow to the country's economy that is yet to recover from the post election violence.

'As a matter of urgency, leaders should resolve the stalemate surrounding Kimunya and the Grand Regency. Markets hate uncertainty,' the Sunday Nation said in an editorial.

Meanwhile, the government said it had registered a caveat against the title deed to protect the hotel that is said to have been sold to company called Libyan Arab African Investment Kenya Limited.