JERUSALEM, (Reuters) – Prime Minister Ariel Sharon””s condition improved on Monday, the day after he suffered a minor stroke that raised questions about how long he could dominate Israeli politics.

The hefty 77-year-old former general, battling for re-election after pulling Jewish settlers from the Gaza Strip and remaking Israel””s political landscape, was rushed to hospital on Sunday and stayed overnight for tests.

&#34I am fine. I guess I should have taken a few days off,&#34 Sharon told Israeli media overnight after his stroke. &#34There are people who are already interested in a replacement? Well, maybe it””s too soon. I””m still here, no?&#34

A parliamentary election is due in March and some commentators suggested that the health scare could damage the prospects of Sharon””s new centrist party Kadima.

&#34Kadima””s existence depends on one man,&#34 wrote Nahum Barnea in the mass-market Yedioth Ahronoth daily. &#34It is reasonable to assume that the stroke…damaged his party in electoral terms.&#34

Aides rushed to assure Israelis that Sharon was in no danger and that there was no need for even a temporary transfer of his powers. Sharon is very much a one-man show and his exit from the scene would inevitably mean a major upheaval.

The head of Sharon””s office said on Monday that the prime minister was able to walk around and joke and might make a statement later on Monday.

&#34There was a big improvement in his condition,&#34 said Ilan Cohen. &#34As soon as there is reliable medical information, you””ll receive it immediately.&#34

CENTRAL ROLE

Sharon has been a central figure in shaping the Middle East for decades. Once the archetype of the Israeli hawk, he won praise at home and abroad for this year””s Gaza withdrawal.

His role has never been more critical than after pulling settlers from the occupied strip this year and quitting his right-wing Likud party to form a new movement with a promise to pursue peacemaking with Palestinians.

Israel””s shekel briefly dipped against the dollar because of concerns over Sharon””s health. Key Israeli share indices were down as much as 0.5 percent.

Sharon””s illness overshadowed Monday””s vote to succeed him in what remains of his Likud party, now trailing at third place in the polls behind Kadima movement and leftist Labour.

Surveys of Likud voters give an edge in the leadership fight to former Prime Minister Benjamin Netanyahu, Sharon””s old rival who resigned as finance minister in protest at the Gaza pullout.

Close on Netanyahu””s heels is Foreign Minister Silvan Shalom, seen as potentially more open to peacemaking.

Sharon has said he wants to seek an agreement with the Palestinians, while insisting that Israel will keep major West Bank settlements and ruling out talks before Palestinians disarm militants under a U.S.-backed peace &#34road map&#34.

Violence has dampened hopes that the Gaza pullout could allow the resumption of negotiations that folded in 2000 before a Palestinian uprising broke out.

Israeli warplanes struck the Gaza Strip overnight and the army said it was targeting roads used by militants firing rockets into Israel.