The Church of England has rejected claims from the Palestine Solidarity Campaign that it had withdrawn investments from an international corporation as a protest against Israel.

Pro-Palestinian campaigners have made several attempts to persuade the Church to pull out of the engineering firm Caterpillar, saying that the company’s bulldozers were used by Israel to support the occupation of the West Bank.

But a Church spokesman insisted that a decision, taken in October, to sell its stake in Caterpillar was made on “financial” and not ethical investment grounds.

In a statement put out on Monday, Betty Hunter, general secretary of the Palestine Solidarity Campaign, claimed that the Church had sent a “clear message… that they will not have their money tied up in companies that are directly or indirectly engaged in the suppression of the rights of Palestinians”. She added: “The Church’s removal of £2.2 million is a significant blow to those who say that ethical and morally responsible investments can’t be used as a peaceful weapon against the Israeli Government.”

But a Church spokesman drew attention to a decision by its Ethical Investment Advisory Committee from March 2006 — which “still holds”, he said — not to recommend divestment from Caterpillar.

Instead, the shares were sold last autumn on “financial grounds”, he explained.